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S. Korea's CDS premium hits 28-month high
제목 없음
The cost of insuring South Korea's sovereign debt against default shot up to a
28-month high, data showed Friday, a day after ongoing global uncertainties
rocked local financial markets.
On Thursday, the main bourse slumped 2.9 percent and the Korean won plummeted 29.9 won against the U.S. dollar following the credit rating cuts of U.S. and Italian lenders and the U.S. Federal Reserve's grim economic outlook.
The CDS premium on South Korea's five-year foreign currency bonds closed at 206 basis points on Thursday, up 33 basis points from the previous session, according to industry data.
The figure marks the highest level since the 208 basis points registered on May 6, 2010. A basis point is 0.01 percentage points.
South Korea's CDS premium has been trending higher following the first-ever rating cut on U.S. debt last month. After ending at 101 basis points on Aug. 1, the rate soared to 121 basis points following Standard & Poor's downgrade on Aug. 5.
The spread on CDSs reflects the cost of hedging credit risks on corporate or sovereign debt. The recent steep rise indicates a deterioration in the credit of South Korean government bonds.
The spread on South Korea's CDSs reached a record 699 basis points on Oct. 27, 2008 when the country was in the midst of the global financial crisis.
Date
2011.09.23
On Thursday, the main bourse slumped 2.9 percent and the Korean won plummeted 29.9 won against the U.S. dollar following the credit rating cuts of U.S. and Italian lenders and the U.S. Federal Reserve's grim economic outlook.
The CDS premium on South Korea's five-year foreign currency bonds closed at 206 basis points on Thursday, up 33 basis points from the previous session, according to industry data.
The figure marks the highest level since the 208 basis points registered on May 6, 2010. A basis point is 0.01 percentage points.
South Korea's CDS premium has been trending higher following the first-ever rating cut on U.S. debt last month. After ending at 101 basis points on Aug. 1, the rate soared to 121 basis points following Standard & Poor's downgrade on Aug. 5.
The spread on CDSs reflects the cost of hedging credit risks on corporate or sovereign debt. The recent steep rise indicates a deterioration in the credit of South Korean government bonds.
The spread on South Korea's CDSs reached a record 699 basis points on Oct. 27, 2008 when the country was in the midst of the global financial crisis.
Source: Yonhap News (Sept. 23, 2011)