The price of political risk

Korea credit

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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 $750 million, despite pricing tightening to 40 basis points over mid-swaps (the cost of swapping between variable and fixed-rate payments for the most highly rated companies), equating to 96bp over 2016 US Treasury bond spreads.

That was an impressive outcome for an A2/

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