SEOUL, March 18 (Xinhua) -- South Korean banks' funding conditions in the global market continued to improve, sending the proportion of short-term foreign debts to the lowest since the 2008 global financial crisis, financial watchdog data showed Monday.
Short-term foreign debts that mature within one year accounted for 18.1 percent of the total as of the end of January, the lowest since Lehman Brothers collapsed in 2008, according to the Financial Supervisory Service (FSS). External liabilities held by domestic banks totaled 116.4 billion U.S. dollars as of end- January.
After peaking at 50.1 percent as of end-2008, the short-term debt proportion continued to fall to 34.4 percent at the end of 2009 and 26.3 percent as of end-2011.
Falling dependence on short-term debts came as banks repaid such debts with long-term foreign funds secured in advance. Local banks made efforts to diversify funding sources, raising dependence on Asia and North America instead of reducing dependence on Europe.
Creditworthiness was enhanced after South Korea's sovereign debt rating was upgraded. Global credit rating appraiser Moody's revised up South Korea's sovereign debt rating by one notch to ' Aa3' in August 2012.
The cost of hedging against losses on sovereign debts declined to 66 basis points as of the end of February after surging to 229 basis points in October 2011 when the European fiscal crisis deepened.
Credit spread for banks' foreign currency debts that mature in five years fell to the double-digit level of 88 basis points as of end-January, down from 174 basis points in the second half of 2011.