The Bank of Korea began raising rates long before the U.S. Federal Reserve, and Korean borrowers have had to start living with rising rates. Now, the apparent default of the developer whose borrowing financed the construction of Legoland Korea, and problems with short-term borrowing in the corporate debt market more generally as rates rise, have heightened worries about the state of the market.

There are concerns in South Korea that otherwise reliable borrowers (investment-grade issuers) have had more trouble rolling over existing debt, or issuing new debt to meet their obligations (see this BOK report on liquidity risk). The size of new debt issuance in the corporate bond market also hit record lows in October, registering a net negative with corporations actually paying down debt.