Banks’ overseas borrowing costs fall to 3-year low in February

Korean banks’ short-term foreign borrowing costs hit an over 3-year low in February amid eased concerns over the eurozone crisis, the financial watchdog said Monday.

According to the Financial Supervisory Service, the spread on short-term foreign borrowing by 16 local lenders stood at 8.8 basis points, a drop of 23.9 basis points from January. A basis point is 0.01 percentage points.

The February figure is the lowest since the watchdog began to compile related data in 2009.

The spread on mid and long-term foreign borrowing that matures in five years also fell 21 basis points to 246 basis points, according to the FSS.

Their mid and long-term overseas borrowing declined last month as the lenders armed with ample foreign currency liquidity repaid short-term debts, the watchdog said.

The refinancing rate of local banks’ mid and long-term foreign debts came to 267.6 percent at the end of last month, compared with 382.2 percent a month ago, it said.

The comparable figure for their short-term foreign borrowing also declined to 65.1 percent last month from 90.3 percent a month earlier, according to the watchdog.

The rollover rate gauges the percentage of fresh overseas borrowing against foreign debts that mature after one year. A refinancing rate of more than 100 percent indicates local lenders have acquired more fresh foreign loans rather than refinancing their maturing foreign debts. 

(Yonhap News)