Korea’s Latest Credit Scare Clouds Funding for Riskier Firms

The surprise decision by a private equity-owned supermarket chain in South Korea to seek a court-led restructuring is reigniting jitters in the local credit market, creating an early test for the new administration of President Lee Jae-myung.

There hasn’t been a won corporate bond issued since March with a BBB rating, the second-lowest investment grade, in the longest such drought in 14 months, according to data compiled by Bloomberg. Spreads on the lowest high-grade debt are hovering near their highest in half a year, the data show. That’s adding to strains at weaker borrowers even as better-rated firms carry on debt financing as usual.