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International investors are turning to Korean bonds in droves. But with spreads now at record tights, is the market pricing in the risks of investing in South Korea? One serious threat is the political risk posed by its neighbour over the border, as Phil Moore reports
The reaction to Korean steel producer Posco's bond launched in early August typifies the buoyancy of the country's credit market. The $300 million 10-year Reg S transaction, led by ABN Amro, HSBC and UBS, generated demand of about $750 million in spite of pricing which tightened to 40 basis points over mid-swaps, equating to 96bp over the 2016 US Treasury.
That was an impressive outcome for an A2/A- rated company which only days before had issued an apology "to all of Korea for the trouble and
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