South Korea’s credit default swaps hit a low

An employee wearing a protective mask works on the production line at the TYM Corp. tractor factory in Iksan, South Korea, on Friday, April 23,2021.

SEOUL: The cost of insuring exposure to South Korea in the credit default swaps (CDS) market dropped to the lowest in over a decade yesterday, Refinitiv data showed, amid indications that the economy was recovering from the pandemic.

South Korea reported a 41.1% surge in exports in April after its gross domestic product growth accelerated in the first quarter, as global demand rose and the government maintained support for ailing small businesses.

“If last year was about hanging-in-there, this year (the economy) is set for a turnaround, ” vice finance minister Lee Eog-weon said in a news event.

The drop in the CDS premium “is meaningful as many other economies saw theirs rising since April”, he added.

Five-year CDS for South Korea fell to 18.92 points, having fallen three basis points (bps) since early April, Refinitiv data showed. That was the lowest since 2008. That for China rose two bps to 37 bps as of yesterday, while data for Japan remained unchanged at 17 bps for the same period. ─ Reuters

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