Local banks refinance foreign debt

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Local banks refinance foreign debt

Korean banks saw a sharp rise in short-term foreign borrowing in August as their funding conditions remained stable despite the growing threat of a double-dip recession in the U.S. and Europe’s debt crisis, the financial watchdog said yesterday.

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.

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