Korea and Japan had a similar chance of declaring a national credit default as of the end of last month, a report showed Friday, after a recent surge in Japan’s economic woes.
The likelihood of the two countries plunging into sovereign default became almost the same after Japan logged its first trade deficit in 31 years and may be subject to a downgrade in its credit rating.
According to a report released by the Korea Center for International Finance, Japan’s credit default swap premium stood at 138 basis points as of January’s end. Korea’s CDS spread reached 150 basis points. One basis point is equivalent to 0.01 percentage point.
The lower the CDS premium, the less likely a country is to go belly-up.
The gap between the CDS spreads of two countries stood at a mere 12 basis points as of last month. The difference between the CDS spreads of Japan and South Korea has been trending downward since last fall.
(Yonhap News)
