© Reuters. The logo of the Bank of Korea is seen in SeoulSEOUL (Reuters) – The finances of most South Korean households and companies are strong enough to cope even if borrowing costs were to rise by 100 basis points, the central bank said on Thursday.
A 100 basis point rise in interest rates would increase local companies’ debt burden by 14.2 percent per year, the Bank of Korea (BOK) said in its twice-yearly report on financial stability.
Even with the increased debt payment burden, the financial standing conditions of South Korean companies would be in “fair condition” the report said.
For middle-to-small-sized companies, a full percentage point rise in rates would increase the interest payment burden by 17.7 percent versus 14.8 percent for larger businesses.
A full percentage point rise in rates would not be a major burden on most households, the BOK said in the report.
Home loans and other debt owed by South Korean households jumped 9.5 percent in the third quarter from a year earlier, but that was the slowest debt growth since a 9.2 percent annual gain in the second quarter of 2015.
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Source: Investing.com
