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To: Mike Winn who wrote (754)	1/29/1998 1:32:00 PM
From: 4-UR-Eyes-Only	Respond to of 1491

Positive news on Korea. biz.yahoo.com Thursday January 29, 1:14 pm Eastern Time EMERGING MARKETS-Korea fires hope in Year of Tiger By Ben Hirschler LONDON, Jan 29 (Reuters) - South Korea, the last ''tiger'' to be hit by Asia's financial crisis, is proving the first to bounce back and its recovery is fuelling hopes for the region at large. Foreign analysts said on Thursday that a deal to restructure approximately $24 billion of short-term debt on better-than-expected terms had boosted sentiment towards Asia and emerging markets generally. ''To the extent that the Korean crisis generated the worst of the Asian crisis, then what seems to be the end of the Korean crisis ought to be very positive for Asia,'' said David Lubin, emerging market adviser at HSBC. Officials at credit rating agencies Standard & Poor's and Fitch IBCA both told Reuters the agreement was ''positive'' for Korea's rating outlook. But Paul Rawkins, associate director sovereign ratings at Fitch IBCA, said a similar deal for debt-laden Indonesia, which has a vast number of private debtors, would be a lot more difficult. Bond traders said they expected the major rating agencies to upgrade Korea shortly. The country's paper is currently assigned ''junk'' bond status. London market-makers signalled approval of the debt package by marking up prices for Korean debt sharply. The yield on the benchmark bond due in 2006 from the state-owned Korea Development Bank narrowed to 3.60 percent over U.S. Treasuries from around 4.60 a week ago and 10 percent at the height of the country's financial crisis in December. Foreign exchange trading in the won was at a standstill with Seoul closed to celebrate the start of the Chinese Year of the Tiger. But analysts said the won could rally strongly on Friday and into next week. ''The debt deal is an initial sign of a return of stability to North East Asia and I think it will filter through into the rest of the region over time,'' said Mitul Kotecha, treasury economist at Standard Chartered. ''It was expected, but the terms of the deal have been quite favourable with the three-year loan at 2.75 percent over Libor against the initial expectation of four to five percent over.'' Under the plan, Korean banks can swap their short-term, non-trade credits for new loans of one-, two- or three-years, at rates of 2.25 percent, 2.50 percent and 2.75 percent over the six-month London Interbank Rate (Libor). The loans will be guaranteed by the government. London dealers were also encouraged by the fact that the group of 13 international creditor banks had conceded another key demand -- a call option allowing Seoul to repay loans, once its credit ratings improve. In addition to the debt relief, HSBC's Lubin noted Korea's macroeconomic fundamentals were turning around with a current account surplus in December equivalent to 5-10 percent of GDP, depending on the exchange rate used. Some foreign investors in Korea's equity market, however, were cautious about the outlook for share prices, arguing much of the good news surrounding the debt deal had already been discounted. As a result, Korea ranks as the world's top-performing emerging market in the year to date with a 43.1 percent gain in dollar terms, according to the International Finance Corp (IFC/IPRE). ''We're certainly interested in the Korean stock market but it has gone up too fast. At current levels there is too much optimism already built into the price,'' said one fund manager, who asked not to be identified. Korean global depositary receipts -- which trade in London in lieu of the underlying shares -- were virtually unchanged in early trade on Thursday, with players sidelined by the Asian holidays. Related News Categories: US Market News, international