Korean banks sharply increased short-term foreign borrowing in August as their funding conditions remained stable despite worsening external uncertainties, the financial watchdog said Friday.
A total of 16 local banks refinanced 157.4 percent of their maturing short-term foreign debt through fresh borrowing last month, up from 67.3 percent in July, according to the Financial Supervisory Service (FSS).
The figure is the highest rate posted since the watchdog began compiling the data in January 2008. The previous high was 138 percent in June 2010. A bank's short-term refinancing rate measures the percentage of its new borrowing against its foreign currency debts that mature in one year or less.
The FSS said local lenders rushed to secure foreign currency to brace for a possible credit crunch stemming from U.S. and European debt problems.
"The foreign-currency funding conditions of domestic banks remained relatively stable in August despite S&P's downgrade of the U.S. credit rating on Aug. 5 and concerns about the spread of European sovereign debt crisis," the watchdog said.
The spread on credit default swaps (CDSs) for five-year South Korean government bonds soared to an yearly high of 148 basis points on Aug. 24, but cooled to 128 basis points by the end of August, according to the FSS.
The August figure marks a rise from 103 basis points logged at the end of July. A basis point is 0.01 percentage point.
The spread on CDSs reflects the cost of hedging credit risks on corporate or sovereign debt. (Yonhap)