Korean risk premiums exceed Thailand, ‘raised long term'
Tensions on the Korean peninsula mean CDS prices are likely to stay high for some time, analysts say
A rapid escalation in tensions followed announcements that North Korea was responsible for an attack on a South Korean naval vessel, which drew an instant response from the market. Spreads on South Korean sovereign five-year credit default swaps (CDSs) were pushed to a peak of close to 171.62 basis points on May 25, slightly higher than those of Thailand (170.375bp), which is also seeing political disturbance.
Economists at Standard Chartered say the dispute is causing an "economic rebalancing"
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