Interest rate on commercial paper hits record low

SEOUL, May 27 (Yonhap) -- South Korea's benchmark interest rate on commercial
paper (CP) dropped to an all-time low Wednesday due to weak corporate demand for
funds amid a prolonged economic slump, an industry association said.

The interest rate on 91-day commercial paper, an unsecured promissory note,
tumbled to 2.99 percent, down 0.01 percentage point from the previous session,
according to the Korea Financial Investment Association.
Wednesday's close was the lowest since the association began compiling related
data. It was also the first time for the interest rate to fall below the
3-percent mark.
"The benchmark rate hit a record low as companies remain reluctant to borrow
short-term money due to the economic downturn," said Shin Dong-joon, head of the
association's bond market team. "It also indicates good credit companies are wary
of investing in new plants and equipment."
The South Korean economy has been swamped in the worst economic downturn in 11
years, stung by the global recession that has made a big dent in exports, its
main growth engine.
The economy barely averted a recession, or two straight quarters of contraction,
by growing 0.1 percent on-quarter in the January-March period. In the final
quarter of 2008, it shrank 5.1 percent from three months earlier.
(END)