South Korea, Creditors Reach Agreement

South Korea and its international creditors agreed to restructure $24 billion of Korean bank debt. The debt will be exchanged for Korean government-backed loans due in one to three years. The one-year loans will pay interest of 2.25% over the six-month London interbank offer rate, or Libor. Korea’s two-year loans will pay 2.5% over Libor. The three-year loans will pay 2.75% over Libor. “Today’s agreement is a key step toward Korea’s goal of returning shortly to the international capital markets,” Citicorp Vice Chairman William Rhodes said in a statement. South Korean officials and executives from several major U.S. banks have been holding talks in New York this week to negotiate the debt exchange. The International Monetary Fund promised a record $60 billion to help bail out South Korea, which saw its currency, stocks and bonds plunge as its economy slowed and bankruptcies mounted. The debt exchange is to begin next month and take place by the end of March, officials said.