The cost for Korean borrowers of insuring dollar bonds against default (CDS premiums) surged from 20 basis points (0.2 percent of the value of the loan) in the summer of 2007 to 700 by October 2008.11 Adding 7 percent to the interest burden of a bank bond ruled out further borrowing for the foreseeable future. Even banks with government backing, such as Woori, found themselves shut out of repo markets.
