South Korea's foreign debts topped 400 billion U.S. dollars for the first time as foreign investors snapped up long-term bonds amid enhanced economic fundamentals.
External debts rose 14.7 billion dollars from a year earlier to 413.4 billion dollars as of the end of 2012, breaching the 400- billion-dollar mark for the first time in the country's history, Bank of Korea (BOK) and Ministry of Strategy and Finance said in their respective statement on Wednesday.
Long-term debts, which mature in one year or more, increased 25. 4 billion dollars last year to 286.8 billion dollars as offshore investors ramped up purchases of government bonds and monetary stabilization bonds issued by the central bank and the finance ministry. Companies also raised issuance of foreign currency- denominated bonds amid improved fundamentals.
Global rating companies, including Moody's Investors Service, upgraded its sovereign rating for South Korea last year, fueling demand for the nation's bonds. The Asia's No.4 economy kept its current account surplus trend, and the growth accelerated in the fourth quarter, boosting expectations for the economy bottoming out.
External liabilities, due less than one year, fell 10.7 billion dollars in 2012 to 126.7 billion dollars as banks repaid short- term debts following tightened regulations on such debts. Ceilings on currency derivatives that banks can hold were lowered last year, reducing demand for short-term debts.
The ratio of short-term debts to the total external liabilities was 30.6 percent as of end-2012, the lowest with the exception of 1998 and 1999 when the Asian foreign exchange crisis occurred. The reading was 21.3 percentage points lower than September 2008 when the global financial crisis happened.
The nation's ability to repay foreign debts improved as foreign reserves sustained record-breaking trend. Foreign reserves reached 327 billion dollars at the end of 2012, up 20.6 billion dollars from a year ago.
External credit, or the money to receive from overseas, was 535. 9 billion dollars at the end of 2012, up 39.2 billion dollars from a year before. Net credit, or external credit minus external liabilities, rose 24.5 billion dollars last year to 122.5 billion dollars. The ratio of total foreign debts to gross domestic product was 35.5 percent.
