Seoul, March 9: South Korea on Monday hailed a global roadshow to its international bankers a big success, boasting that some 90 per cent of the $24 billion in short-term bank loans would be rolled over.But the release of $8.0 billion in bilateral aid to South Korea -- promised by industrialised nations under a $58.35 billion package from the IMF -- would be delayed until Seoul raised fresh overseas capital.
``We've had a favourable response from international creditors at the recent roadshow,'' a finance ministry official told Reuters. ``Almost 90 per cent of lenders have promised to swap their short-term obligations.''
South Korea on Monday wrapped up an 11-day roadshow to finalise the roll-over deal and reassure international creditors that the country's debt crisis was under control.
``The roadshow was quite a success,'' an economic advisor You Jong-keun to president Kim Dae-jung and a leader of the roadshow, was quoted by an aide as telling reporters.``Societe Generale, for example, hasverbally agreed to swap all South Korea's short-term loans for new loans with three-year maturities,'' You said.``Major US banks such as Citibank and Chase Manhattan have also agreed to roll over their loans,'' he said.
But analysts cautioned that the rollovers provided only temporary relief for cash-strapped Korea, but no real solution for the times ahead.
``A lot of problems are just being artificially delayed,'' said Keith Nam, market strategist at Abn Amro Asia Ltd.
He said the issue of recapitalising debt-laden financial institutions needed to be addressed if these extensions are to see any type of ``viable result.''
``You have to find a cure, but all you're doing is finding some short-term relief,'' Nam said.
In late January, South Korea and global creditors agreed to exchange about $24 billion of Seoul's short-term debt for longer-term obligations guaranteed by the government in a deal that rescued Seoul from the prospect of national default.
Meanwhile, disbursement of $8 billion in aidpromised by 13 industrialised countries was expected to be delayed until Seoul came up with additional overseas capital.``The industrialised nations plan to extend $8 billion in loans only after Seoul manages to raise fresh overseas capital through global bond offerings or syndicated loans,'' said a senior ministry official in charge of international financing.
