Korean banks’ short-term overseas borrowing climbed in December as lenders rushed to secure foreign currency liquidity amid concerns over a deterioration in external conditions, the financial watchdog said Monday.

A total of 16 local banks refinanced 120.3 percent of their maturing short-term foreign debts through fresh borrowing last month, compared with 95.9 percent in November, according to the Financial Supervisory Service.

The rollover rate gauges the percentage of fresh overseas borrowing against foreign debts that mature in one year or less. A refinancing rate of more than 100 percent indicates local lenders have acquired more fresh foreign loans rather than refinancing their maturing foreign debts.

The refinancing rate of 12 local banks’ mid- and long-term foreign debts stood at 174.4 percent, slipping from 179 percent a month ago, the FSS said. The December figure, however, marked the seventh straight month lenders acquired fresh foreign debts, it added.

“Local banks expanded their foreign borrowing as part of preemptive efforts to brace against a worsening of external circumstances,” the FSS said.

Market uncertainties stemming from the eurozone debt crisis and slowing economic growth is expected to linger this year amid sovereign credit downgrades and a lump of eurozone government debt maturities.

Meanwhile, the spread on credit default swaps for South Korea’s dollar-denominated currency stabilization bonds reached 161 basis points as of the end of December after hitting 169 basis points following the death of North Korean leader Kim Jong-il. A basis point is 0.01 percentage point.

The watchdog said although the figure gained 11 basis points from the previous month, the increase was relatively small compared with other countries.

The FSS said it plans to encourage domestic banks to secure foreign currency liquidity and diversify funding sources as the eurozone debt crisis may persist.

(Yonhap News)