SEOUL, Dec 12 (Reuters) – The government of South
Korea’s Gangwon province on Monday repaid debt owed by a
theme-park developer it partly owns, some three months after its
move to seek a freeze on the debt pushed the country’s money
markets into turmoil.
The repayment helped push down the benchmark three-month
yield on commercial paper, for the first time since the turmoil
started as concerns eased about a liquidity crunch deepening.
The provincial government had already changed its mind and
promised to pay back the debt.
“We repaid the 204.91 billion won ($156.53 million) debt
that we had guaranteed for Gangwon Jungdo Development Corp at
10:25 a.m. (0125 GMT),” a statement from the province cited
Governor Kim Jin-tae as telling reporters.
The three-month commercial paper yield ended down
1 basis point at 5.53% on Monday, its first decline after having
soared 277 basis points since the turmoil started.
Traders said concerns in the market had already faded in the
wake of support measures announced on several occasions by the
policy authorities to help the country’s financial markets avoid
a broader crisis.
“Yields on top-rated paper have already been on a falling
trend recently, especially in the primary market for top
issues,” said one fund manager.
Governor Kim had said in late September he wanted to place
the indebted developer, in which his government was a major
shareholder, in court receivership so his government could limit
future losses from the company.
The comment was largely taken as indicating that the
provincial government would not pay back Gangwon Jungdo’s debt
as guarantor, sparking a surge in money-market rates out of fear
of a series of defaults on debt that was similarly guaranteed by
local governments and public agencies.
The provincial government later reversed its stance and said
it would pay back the debt.
($1 = 1,309 won)
(Reporting by Choonsik Yoo; Additional Reporting by Seunggyu
Lim; Editing by Bradley Perrett and Muralikumar Anantharaman)
Source link
