Word: debts
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...toxic assets that devastated lenders in the West. But as confidence seeped from the region's financial markets, banks became nervous about parting with funds, credit tightened, and stock markets plunged. South Korea has been looking particularly vulnerable to further turmoil. With some $80 billion of its banks' foreign debt maturing by mid-2009, investors worried the country could face a credit crunch that would restrict lending throughout the economy. Those fears have punished Korean stocks and the country's currency. The won plummeted nearly 10% on Oct. 16, its biggest one-day drop since the 1997 Asian financial crisis...
...Seoul's decision to guarantee external debt incurred by South Korean banks was cheered by market analysts. Goldman Sachs noted in a report that the package - which totals some 13% of Korea's GDP - will "go a long way toward stabilizing the jittery financial markets in Korea." Fitch Ratings added that "these measures will ensure sufficient U.S. dollar liquidity to the banking system and real economy." Investors responded positively, but cautiously. The benchmark Kospi stock market index rose 2.3% on Monday, while the won gained 1.4% against the dollar...
...forced to resign following revelations that unauthorized derivatives trading last week produced a $810 million loss. On Sunday, meanwhile, the Netherlands said it would inject a further $13.5 billion into troubled finance company ING - another indication that European banks may not yet have entirely accounted for all the toxic debt they assumed...
...Dubai's biggest risk is its daring reliance on debt to drive its breathtaking building boom. Last week, Moody's estimated that in 2006, the most recent year for figures, Dubai's government and public-sector company debt was at least $47 billion, a staggering 103% of GDP. The investment-rating agency said it expected Dubai's debt to continue outpacing GDP for another five years, exposing Dubai to pronounced financing and geopolitical risks...
...Dubai officials insist that they can meet their debt obligations for the next two years. Analysts point out, however, that the credit squeeze compounds a growing challenge to Dubai's revenue streams. The most obvious is the halving of the price of oil from $147 per bbl. to $70 per bbl. since July, sending Middle East stocks tumbling and rendering regional investors increasingly cautious. Likewise, a global recession is likely to tighten the belts of the international investors and holiday makers that Dubai relies on for its real estate and tourism developments. Even before the global crunch, banks...