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Korea's credit default swap premium is lower than the international average, according to a survey. According to the outcome of Meritz Securities' analysis of 61 major countries, based on data released by Datastream, an American market survey agency, on Monday, Korea's credit default swap premium -- which indicates the bankruptcy risk of the government, businesses or financial firms in a country -- is 3.67 percent, down 0.26 percentage points from the international average of 3.93 percent.
Similar to an insurance policy, CDS is a kind of derivative, for which financial firms, including investment banks, repay the debts of a business or the government if it goes bankrupt. The fee financial firms receive in return is called a premium. The lower the premium is, the lower the bankruptcy risk is.
Pakistan has the highest CDS premium at 25.72 percent, followed by Argentina (23.83 percent), Venezuela (16.51 percent), and Ukraine (16.20 percent). These countries' CDS premium is higher than that of Iceland (14.73 percent), whose government is rumored to be on the verge of bankruptcy.
Korea (3.9 percent) ranks 26th among the countries surveyed after Russia (5.6 percent), Turkey (5.37 percent), South Africa (4.19 percent), Brazil (4 percent) and Mexico (3.9 percent).
Malta, in the Mediterranean, ranks lowest at 0.15 percent. Other countries with low CDS premiums are Norway (0.18 percent), New Zealand (0.23 percent), Germany (0.26 percent), Japan (0.34 percent) and the U.S. (0.33 percent).
Shim Jae-yeop, an analyst at Meritz, said, "Statistics on CDS show that the country bankruptcy risk is spreading worldwide. Despite its unstable financial market, Korea is doing relatively better than other countries."
(englishnews@chosun.com )
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