Borrowing Conditions for Korean Banks Improve Sharply

The conditions under which Korean banks borrow money from overseas markets have sharply improved. According to the Bank of Korea(BOK) on February 12, in January 1999, all short-term debts of the seven major commercial banks, which amount to 1.18 billion dollars and were due within the month of January, have been extended.
The average level of spread rates dropped sharply by 0.54 percent from 3.27 percent in December 1998 to 2.73 percent in January of 1999.
The spread rates had risen sharply from 2.45 percent in December 1997 to 4.36 percent in February 1998.
Meanwhile, in international markets for the day, the yields for foreign exchange stabilization fund bonds which the Korean government issued dropped to the 2.42 percent level plus the U.S. TB (Treasury Bonds) rate.
This level, a 0.23 percent decrease from the previous day, is at an all-time low, .
The government explained that the reason is due to Fitch IBCA and S&P's raising of Korea's sovereign credit rating, and the fact that Moody's stated it intends to raise Korea's credit rating as well.
Chung Duck Koo, the deputy-finance minister, said in a press conference, 'The government will not directly borrow money in international finance markets. Instead, the government will borrow money through the Korea Development Bank and the Korea Export and Import Bank which are both banks owned by the government.'