SEOUL– A South Korean insurer’s uncalled foreign currency-denominated debt is adding woes to the country’s already deepening credit crunch, industry sources said Wednesday.

Second-tier insurer Heungkuk Life Insurance Co. has decided to delay exercising a Nov. 9 call option for a perpetual note worth some US$500 million that was issued in 2017.

The insurer said it has opted to put off the redemption of the bond as it had difficulty refinancing the debt with dollar hybrid securities due to unfavorable market conditions.

The bond uncalled by Heungkuk Life sent a shock wave through the financial industry already roiled by a credit crunch amid rising market rates.

The Financial Services Commission (FSC), a South Korean regulator, said Heungkuk Life’s decision was a reasonable move, considering the current market conditions.

The regulator said it will continue to monitor the impact from the incident in order to prevent market confusion.

Source: Yonhap News Agency