(EDITORIAL from The Korea Herald on Aug. 25)
For years, cheap money made debt look almost harmless. The bond market now offer...
The surge in global bond yields is creating a new cost of capital that is threatening economies around the world, including South Korea. As sovereign debt expands and AI-driven borrowing increases, investors are demanding higher compensation for holding long-duration paper due to uncertain inflation and swelling bond supply. The US federal debt is nearing $40 trillion, with annual interest servicing surpassing $1 trillion, rivaling the country's defense budget.
Japan is also pursuing expansionary spending despite a debt burden exceeding 250% of GDP. The implications extend beyond Big Tech, as government bonds and top-rated corporate debt compete for the same investors. South Korea, in particular, is exposed to these global capital flows and domestic long-term rate fluctuations, with household credit reaching a record high.
The transition to higher borrowing costs could weigh on domestic spending, exacerbating the economic challenges faced by South Korea's export-dependent economy.
Brief written by urgent.news from Yonhap News's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
