Credit Strains Prompt Korea to Revive $1.1 Billion Bond Fund
- Developer default drove spike in yields and stoked unease
- Officials are monitoring market; size of fund can be increased
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South Korea is redoubling efforts to shore up the local credit market as yields surge to decade highs and default risks spread, extending efforts to support markets after the country already stepped in earlier this year to slow a tumbling won.
Authorities will swiftly resume buying corporate debt via a 1.6 trillion won ($1.1 billion) bond stabilization fund established at the outset of the pandemic, and will prepare to increase its size, the Financial Services Commission said. Thursday’s statement did not list a sum for the increase but said it’d be via a “capital call,” which would typically involve tapping banks, brokerages and insurers for additional money.