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AI Debt Continues to Rise as Big Tech Bonds Approach $300 Billion Global AI big tech companies are experiencing significant revenue growth due to rising demand for AI, but their debt levels are also surging, primarily due to excessive infrastructure investments. Funding for AI investments is increasingly shifting from operating cash to bonds, new equity, and guarantees.According to the IT industry on October 22, Metas long-term debt rose from $59 billion at the end of March to $80.9 billion by the end of September, an increase of over $22 billion in just six months.In its third-quarter earnings report, Meta announced a revenue increase of 26% to $64.6 billion, but capital expenditures reached $34.91 billion, accounting for 54% of its revenue. This suggests that the company spent about $2.1 billion more than it generated in cash flow.To cover the shortfall, Meta has turned to external funding. Since November of last year, the company has raised $55 billion through bonds, including $30 billion in October and $25 billion in April. Notably, it did not repurchase any shares in the first quarter. As of June 30, Metas net cash, excluding bonds, was approximately $6 billion, down from about $22.6 billion at the end of the previous year.In its joint venture with Blue Owl to build the Hyperion data center, Meta is also carrying off-balance-sheet special purpose vehicle (SPV) debt amounting to approximately $27.3 billion. Additionally, the board approved the creation of non-voting Class C common stock, effective January 2027.The financial situations of five major tech companies—Alphabet, Amazon, Meta, Microsoft, and Oracle—are similarly concerning. These companies issued approximately $220 billion in bonds by August this year, nearly 1.8 times the $121 billion issued in the previous year, which is roughly equivalent to 300 trillion won.As of June 30, Amazons long-term debt stood at $128.9 billion, while Alphabets total debt exceeded $100 billion, including bonds with maturities of up to 100 years. S&P Global Ratings estimates that the capital expenditures of these five companies will reach about $750 billion this year, representing 38% of their combined revenue.According to Barclays, AI-related bonds account for about 15% of U.S. investment-grade corporate bond issuance, and JPMorgan forecasts that global technology, media, and telecommunications (TMT) bond issuance will reach a record $540 billion this year.Oracle faces a heavier burden, with long-term debt reaching $149 billion at the end of the recent fiscal year, an increase of $53 billion in one year. However, its cash reserves are only $31.3 billion, about one-fifth of its debt. The companys credit rating has been downgraded to BBB. OpenAI has also reportedly reduced its capital expenditures by nearly half due to investment burdens and is seeking an additional $30 billion in funding.Anthropics revenue surged to $16.3 billion in the first half of this year, up from $1.1 billion a year earlier, but its infrastructure spending increased nearly fourfold from $2.3 billion to about $9 billion. The companys net loss for the first half also rose to $80.7 billion, six times higher than the $13 billion reported in the same period last year, with $72 billion attributed to non-cash expenses related to convertible bond valuations.The debt cycle extends to chip suppliers and model companies as well. According to Forbes, citing Nvidias quarterly report, the companys commitments for data center leases and capacity guarantees amount to as much as $164.5 billion, with direct investments or commitments to AI cloud companies exceeding $7 billion.* This article has been translated by AI. October 25, 2026 10 -
Former Interior Minister Choi Hyung-woo Passes Away, Political Tributes Pour In Choi Hyung-woo, a key political ally of former President Kim Young-sam and a prominent figure in the Sangdo-dong faction, passed away on October 24. His funeral home has seen a steady stream of condolences from politicians across the aisle, as his political journey, marked by a commitment to democracy during the harsh military regimes and his role in reform policies following the establishment of a civilian government, is being revisited.According to Yonhap News, Choi died at 3:30 a.m. at the Seoul National Veterans Hospital. He was 91 years old.Born in Ulsan in 1935, Choi entered politics as a student representative during the April 19 Revolution in 1960. He was elected to the National Assembly as a member of the New Democratic Party in 1971 and served six consecutive terms until the 15th National Assembly.Choi was subjected to torture for about three months after being taken by the National Security Command for criticizing the long-term rule of the Park Chung-hee regime. He faced further hardships after being detained shortly after the declaration of martial law by Chun Doo-hwans military government in 1980, which resulted in the loss of his parliamentary seat. He later became the secretary-general of the Democratic Movement Promotion Council in 1985, actively participating in the democracy movement.After the merger of three parties in 1990, Choi joined the Democratic Liberal Party, serving as the Minister of Interior under the Kim Young-sam administration after holding the position of Minister of Political Affairs and Secretary-General of the party. He was regarded as a key figure in the Sangdo-dong faction, often referred to as Left Dong-young, Right Hyung-woo alongside former Minister Kim Dong-young. Following his election in the 1996 general election, he was mentioned as a potential candidate for the next presidential election among the so-called Nine Dragons, but he suffered a stroke in 1997, leading to a prolonged battle with health issues.At the funeral home in Samsung Medical Center in Gangnam, Seoul, tributes from political figures continued to pour in. A wreath sent by President Lee Jae-myung was displayed alongside those from former National Assembly Speaker Jeong Ui-hwa, former Deputy Speaker Lee Seok-hyun, former Saenuri Party leader Kim Moo-sung, and former Democratic Party leader Son Hak-kyu. Seoul Mayor Oh Se-hoon, Minister of Planning and Budget Park Hong-keun, and People Power Party floor leader Jeong Jeom-sik also sent floral tributes to express their condolences.The funeral committee is chaired by Kwon No-gap, chairman of the Kim Dae-jung Foundation, along with Kim Deok-ryong, chairman of the Kim Young-sam Democratic Center, and Jeong Dae-cheol, chairman of the Korea Constitutional Society. The funeral will be conducted by the Korea Constitutional Society and the 4.19 Revolution Veterans Association, with Democratic Party leader Kim Min-seok and People Power Party leader Jang Dong-hyuk serving as co-chairs.Reflections on Chois commitment to the democracy movement and his unwavering loyalty to former President Kim Young-sam were shared at the funeral home.Jeong Dae-cheol recounted to Yonhap News an anecdote from 1978 when he and Choi met with Cardinal Kim Soo-hwan. At that time, Choi expressed confidence that the end of the Park Chung-hee regime was near, demonstrating his belief in democracy. Jeong remembered Choi as a “truly human person” who spoke his mind even to YS when he felt it was necessary.Chois son, Choi Je-wan, recalled that while his father was strict as a politician, he was warm-hearted towards his family. He shared that his father endured torture and house arrest under the Park and Chun regimes and learned during a medical examination in Germany after his stroke that his aorta had ruptured, which he believed was a consequence of the torture.The son also highlighted his fathers deep loyalty to Kim Young-sam, noting that even when he struggled to maintain his balance, he visited Kim every January 1 until the former presidents passing, demonstrating his commitment to their political bond.Independent lawmaker Han Dong-hoon, who has emphasized the legacy of the YS spirit, also visited the funeral home to pay his respects. He stated, “He devoted himself to protecting democracy during truly harsh times,” adding that without Choi Hyung-woo, South Koreas democracy would have been delayed.Chois funeral will be held over three days, with the burial scheduled for 8 a.m. on October 27 at the National 4.19 Democracy Cemetery.* This article has been translated by AI. October 24, 2026 19
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KEPCO bond cap revives Korea's electricity rate dilemma SEOUL, October 24 (AJP) — South Korea's long-running electricity rate debate is resurfacing as state utility Korea Electric Power Corp. (KEPCO) faces a looming borrowing limit that could constrain investment in the country's rapidly expanding power grid. KEPCO could exceed its statutory bond issuance ceiling by about 19.2 trillion won ($14.5 billion) once a temporary exemption expires at the end of 2027, according to estimates based on the utility's medium-term financial plan. Its outstanding bonds are projected to reach about 76 trillion won by the end of next year, compared with an estimated statutory ceiling of 56.8 trillion won when the normal limit returns in 2028. The problem dates back to 2021, when global fuel prices began rising faster than KEPCO was allowed to pass through to customers. The state utility buys electricity from generators and resells it to households and businesses at regulated prices, leaving it exposed when coal, liquefied natural gas and other fuel costs rise sharply. Korea introduced a fuel-cost adjustment system in 2021, but calculated increases were repeatedly withheld as the government sought to shield households and businesses from the economic effects of the COVID-19 pandemic and rising inflation. The imbalance worsened after Russia invaded Ukraine in 2022, pushing KEPCO from a consolidated operating loss of 5.8 trillion won in 2021 to a record 32.7 trillion won loss the following year. As losses mounted, KEPCO increasingly relied on bond issuance to fund operations. The Yoon Suk Yeol administration responded with a series of electricity rate increases beginning in 2022 and accelerating in 2023, including hikes of 13.1 won per kilowatt-hour in January 2023 and another 8 won in May. Lawmakers also temporarily raised KEPCO's bond issuance ceiling at the end of 2022, allowing the company to borrow up to five times its capital and reserves through 2027, while the utility launched asset sales, investment adjustments and other cost-cutting measures. Falling fuel prices, higher electricity rates and restructuring gradually restored profitability, with KEPCO's operating loss narrowing to 4.5 trillion won in 2023 before swinging to profits of 8.4 trillion won in 2024 and 13.5 trillion won last year. Its balance sheet recovered much more slowly because years of losses had already been financed largely through borrowing. In October 2024, the government raised industrial electricity rates by an average 9.7 percent but froze residential and general-use rates, citing inflation and pressure on household finances. The Lee Jae Myung administration has so far focused more on restructuring industrial tariffs than on a broad household increase, lowering some daytime industrial rates while raising evening charges and preparing regional pricing aimed at making electricity cheaper in areas closer to major power generation sources. Those changes may redistribute costs among businesses but do little by themselves to reduce KEPCO's accumulated debt, even as the utility faces rising investment needs for the power grid. KEPCO's latest long-term transmission plan calls for about 72.8 trillion won in grid investment through 2038 as semiconductor clusters, artificial intelligence data centers and wider electrification sharply increase power demand. KEPCO President Kim Dong-cheol told lawmakers this month that the company would need to discuss at least a minimal electricity rate increase with the government as grid investment continues to climb. Allowing the temporary bond ceiling to expire without sharply reducing debt could leave KEPCO above its legal borrowing limit, while extending it again would postpone rather than solve the underlying financial problem. Raising electricity rates would strengthen KEPCO's finances and help fund new infrastructure, but would also increase costs for households and businesses — the same trade-off that has defined Korea's electricity policy since the energy shock began. October 24, 2026 13 -
Korea Electric Power Faces Bond Limit Crisis, Renewed Calls for Rate Hike Korea Electric Power Corporation (KEPCO) is projected to exceed its legal bond issuance limit by approximately 19.2 trillion won when a special exemption allowing it to issue bonds up to five times its capital and reserves expires at the end of next year. This situation has reignited discussions about the necessity of raising electricity rates.According to KEPCO and the National Assembly Budget Office on October 24, the special exemption will end next year, reducing the bond issuance limit to twice the capital and reserves starting in 2028.The government expanded KEPCOs bond issuance limit in response to soaring international energy prices due to the Russia-Ukraine war in 2022, aiming to alleviate its financial difficulties. However, the prolonged freeze on residential and general electricity rates has led to a ballooning bond issuance balance, which reached 71.5 trillion won in the first half of this year.The National Assembly Budget Office estimates that KEPCOs total capital and reserves will amount to 28.4177 trillion won by the end of next year. Based on this, the legal bond issuance limit would be 56.8354 trillion won, while the bond issuance balance is expected to reach 76.0489 trillion won at that time, exceeding the legal limit by 19.2135 trillion won.The outlook for KEPCOs performance is also bleak. The recent conflict in the Middle East has driven up liquefied natural gas (LNG) prices, further deteriorating profitability. According to securities firms, KEPCOs operating profit for the third quarter is estimated to drop by 52.29% year-on-year to 26.966 billion won, with a staggering 95.78% decline in the fourth quarters operating profit to 823 million won.KEPCO is also facing challenges in securing funding. Recently, it requested Samsung Electronics and SK Hynix to prepay 25 trillion won in electricity fees for five years, but the request was declined.Compounding these issues is the surging demand for investment in the power grid. According to KEPCOs 11th Long-Term Transmission and Substation Facility Plan, the required investment by 2038 is projected to be 72.8 trillion won, an increase of 16.3 trillion won from two years ago. Considering the power demand from the semiconductor industry and artificial intelligence (AI) data centers, the investment burden is expected to grow even heavier.On October 19, KEPCO President Kim Dong-cheol stated during a National Assembly audit, The need for essential power grid investments is rapidly increasing, so I believe discussions about at least a minimal electricity rate hike should take place with the government.However, given the governments focus on stabilizing prices, there are also calls to extend the special exemption on bond issuance limits instead of raising electricity rates. October 24, 2026 09
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Samsung Life Revamps Retirement Pension App 'SSUM Lounge' Samsung Life announced a complete overhaul of its retirement pension service app, SSUM Lounge, on October 23.The key feature of this update is the introduction of a Retirement Pension Information menu. Users can check major market indicators such as exchange rates, interest rates, and stock indices on the apps main screen, Today Briefing. The app also offers four types of content tailored to different stages of pension management, from basic information about the retirement pension system to market analysis.For users unfamiliar with retirement pensions, the First Steps to Pension section provides insights into the characteristics of various systems, differences between pension savings, and criteria for selecting products. It also includes practical information on tax deductions and methods for receiving pensions.Content for those managing their assets directly, such as Defined Contribution (DC) and Individual Retirement Pension (IRP) participants, has also been developed. The Investment Insights section offers updates on domestic and international economic trends and stock market forecasts. Users can access an Investment Guidebook that summarizes stock and bond market outlooks, semi-annual investment keywords, and asset management strategies based on research from asset management firms.A new Pension Class has been established, allowing users to attend expert lectures in real-time. Online seminars will be held once a month for one hour starting at noon.A Samsung Life representative stated, Since retirement pensions are assets that require long-term management, we focused on creating an environment where customers can easily and conveniently access the information they need. We will continue to expand the content and services of SSUM Lounge to assist customers in systematically managing their retirement assets.* This article has been translated by AI. October 23, 2026 09
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Exchange Rate Rises Slightly to Mid-1320s Amid Risk Aversion The won-dollar exchange rate is fluctuating in the mid-1320s.As of 9:07 a.m. on October 23, the exchange rate in the Seoul foreign exchange market is 1,325.9 won per U.S. dollar. The rate was trading at 1,326.5 won, up 2.3 won from the previous days closing price as of 6 a.m.This slight increase is attributed to heightened risk aversion. On October 22, U.S. stocks fell sharply, particularly in technology shares, as skepticism about AI investments resurfaced.The Dow Jones Industrial Average closed up 11.89 points (0.02%) at 52,867.98. In contrast, the S&P 500 index dropped 93.74 points (1.21%) to close at 7,663.43, while the Nasdaq Composite plummeted 694.0 points (2.6%) to finish at 26,008.86.Funds flowed into safe-haven U.S. Treasury bonds, leading to a decline in bond yields. The yield on the 10-year Treasury note fell by 19.3 basis points to 4.952%, marking the largest daily drop since the regional banking crisis in March 2023.International oil prices surged amid rising military tensions in the Middle East, raising concerns about oil supply disruptions. Brent crude futures closed at $113.17 per barrel, up 4.00%, while West Texas Intermediate (WTI) rose 2.39% to $99.47 per barrel. Brent prices reached their highest level since May 4.The dollar index, which measures the value of the dollar against six major currencies, fell by 0.06% to 101.632.The exchange rate is expected to show fluctuations throughout the day. Min Kyung-won, an economist at Woori Bank, stated, Today, the won-dollar exchange rate is expected to decline during Asian trading due to exporter negotiations and rise during European and New York trading as the risk-off sentiment continues.He added, In European and New York markets, a preference for safe assets, declining U.S. Treasury yields, and a weaker dollar are becoming patterns. Given the unfavorable atmosphere for the won, if global stock market sell-offs persist, the upward movement of the exchange rate is likely to increase significantly.* This article has been translated by AI. October 23, 2026 09
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Hanwha Investment Upgrades Samsung E&A Target Price to 84,000 Won Hanwha Investment & Securities announced on October 23 that Samsung E&A has exceeded market expectations with its third-quarter performance and is projected to sustain profit growth over the next two to three years. As a result, the firm raised its target price from 70,000 won to 84,000 won, an increase of 20%, while maintaining a buy rating.Song Yu-rim, an analyst at Hanwha Investment & Securities, stated, Samsung E&As third-quarter revenue reached 2.9 trillion won, and operating profit was 500.6 billion won, marking increases of 45.8% and 183.6%, respectively, compared to the same period last year. She noted that the company recorded an earnings surprise, significantly surpassing the market consensus of 252 billion won in operating profit.The improvement in performance was driven by increased sales from affiliates and the recognition of one-time gains. Sales from affiliates rose more than expected, and approximately 100 billion won was recovered from the Saudi Yanbu power project. Additionally, incentives from clients and settlement profits from projects nearing completion contributed to a gross profit margin of 21.5% in the third quarter. However, the net profit was in line with market expectations due to bond call costs from the Bahrain BMP project.On October 22, Samsung E&A also raised its annual performance outlook. The new order target was increased from 12 trillion won to 19 trillion won, while revenue expectations were raised from 10 trillion won to 11 trillion won. The operating profit forecast was also adjusted upward from 800 billion won to 1.4 trillion won, marking the largest figures in the companys history.Song added, We expect the operating profit margin in the fourth quarter to exceed 13%, surpassing the three-year average of 9.3%. Starting next year, we anticipate a sequential increase in sales from affiliates and the chemical engineering sector, which will enable a trend of profit growth.The strengthening of shareholder return policies was also viewed positively. On October 22, Samsung E&A announced a plan to repurchase shares worth approximately 780 billion won. Of this amount, 90 billion won will be used for employee bonuses, while the remaining 690 billion won will be repurchased and subsequently canceled to enhance shareholder value.Hanwha Investment & Securities raised its operating profit forecast for Samsung E&A from 1.12 trillion won to 1.404 trillion won, an increase of 38.7%. The forecast for next years operating profit was also raised from 1.186 trillion won to 1.661 trillion won, a 40% increase.Song emphasized, It is still early to discuss the peak of performance, as we are just at the beginning of improvement. Finding such clear growth in an uncertain macroeconomic environment is challenging. She explained that the target price was raised by increasing the price-to-book ratio (PBR) applied to the estimated book value per share (BPS) for the next 12 months from 2.35 times to 2.6 times.* This article has been translated by AI. October 23, 2026 08
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Capital Companies Dominate Car Rental Market; Korean Association Calls for Focus on Stability As financial authorities consider easing regulations on capital companies car rental operations, industry insiders are expressing concerns about the stability of rental assets. With capital companies already holding nearly half of the domestic car rental market, there are warnings that further expansion could lead to excessive price competition and increased risk of losses.According to the Korea Rental Car Business Association, as of the end of July this year, financial firms, including capital companies, accounted for 45.32% of the domestic car rental market, surpassing large dedicated rental companies at 43.08%. The remaining share is held by over 1,000 small rental firms.Capital companies are subject to a regulation known as the core business ratio, which prevents them from exceeding the average balance of their leasing assets with their rental assets. However, their growth has been rapid. The number of registered rental cars under capital companies increased from approximately 27,000 in 2010 to 557,000 last year, more than a 20-fold rise. From the end of 2021 to the end of July this year, the number of registered rental cars by financial firms grew by 37.5%.In 2005, financial authorities allowed capital companies to engage in rental operations as a secondary business, implementing regulations to limit expansion beyond their core activities. Recently, discussions have emerged in the financial sector about allowing rental operations to exceed the previous 100% limit of the core business ratio. Dedicated rental companies argue that there is no need to further relax this ratio, given the significant presence of capital companies in the market.The Korea Rental Car Business Association asserts that the core business ratio serves as the last safeguard against the expansion of non-financial activities by financial companies.The association is concerned that the expansion of rental assets by capital companies could impact their core financial operations. They warn that aggressive price competition could lead to a decline in the residual value of rental vehicles, potentially contracting the overall market. The residual value is the expected price of a vehicle at the end of the rental contract.For example, if a vehicles four-year residual value is set at 26 million won but the actual sale price is only 20 million won, a loss of 6 million won occurs. Unlike banks, capital companies do not accept deposits and rely on external borrowing, such as bond issuance, for funding. However, if losses occur, it could adversely affect the profitability and capital stability of their existing operations.The association has called for a review of the trends in residual value rates for each capital company, actual disposal prices of returned vehicles, gains and losses from vehicle sales, and the impact of declining used car prices on capital adequacy before any regulatory relaxation.A representative from the association stated, The reduction in rental fees created by increasing competition should not return as a financial burden on consumers in a few years. The focus should be on the health of competition before expanding it.* This article has been translated by AI. October 22, 2026 18
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U.S. 10-Year Treasury Yield Surpasses 5%, Raising Concerns for Long-Term Investors The yield on U.S. 10-year Treasury bonds has surpassed 5%, deepening concerns for long-term investors. As bond yields rise, prices fall, increasing the burden of unrealized losses for existing investors. However, the high yields present an opportunity for new investors to purchase bonds. With the potential for prolonged high interest rates due to U.S. fiscal pressures, careful consideration of investment timing and product selection is advised. According to the Federal Reserve on October 22, the yield on 10-year U.S. Treasury bonds reached 5.12% as of October 20. The yield on 30-year bonds also soared to 5.42%. From March 1 to October 20, the yield on 10-year bonds increased by 1.17 percentage points, while the 30-year yield rose by 0.81 percentage points. The sharp rise in yields is largely attributed to changes in expectations regarding U.S. monetary policy and fiscal pressures. Market expectations for short-term interest rates have increased, compounded by concerns over the deterioration of U.S. fiscal health and the expansion of long-term Treasury supply. There is also upward pressure on the term premium, the additional yield investors demand for holding bonds over a longer period. These structural factors may keep high yield levels sustained for an extended period. For domestic investors, the Bank of Koreas interest rate decisions also play a crucial role. The Banks Monetary Policy Committee decided to maintain the base rate at 3.00% on this day, following two consecutive rate hikes in July and August. While there remains the possibility of further increases, the allure of high yields from U.S. Treasury bonds exceeding 5% is drawing investor interest. So, is now a buying opportunity with long-term bond prices declining? One key factor to consider is duration, which measures a bonds sensitivity to interest rate changes. For instance, a bond with a modified duration of 15 years could see its price drop by about 15% if market rates rise by 1 percentage point. Conversely, if rates fall, significant capital gains could be expected. Actual price fluctuations will vary based on the bonds characteristics. Long-term bond exchange-traded funds (ETFs) are particularly sensitive to interest rate changes. If rates reverse and begin to decline, investors can anticipate gains from rising prices, but further increases could amplify losses. Existing investors may attempt to lower their average purchase price by buying more, potentially increasing their overall losses. If the goal is to secure yields higher than capital gains, purchasing individual Treasuries directly could be an option. Holding individual bonds to maturity guarantees the agreed-upon interest and face value, even if market prices decline in the interim. However, actual yields will vary based on the purchase price, and selling before maturity could result in losses. In contrast, typical long-term bond ETFs continuously replace bonds with longer maturities. Unlike individual Treasuries, they do not guarantee a specific repayment at maturity, making the market price at the time of sale crucial. If predicting interest rate direction is challenging, short-term bond ETFs, which generally exhibit lower price volatility, may serve as an alternative. Exchange rates also significantly influence yields. Even if U.S. Treasury investments yield 5% in dollars, a 5% decline in the dollars value against the won during the same period could negate most of the gains due to currency losses. To mitigate exchange rate risk, investors might consider hedging products, but they should also weigh the costs of such hedges. Ultimately, investing in U.S. long-term Treasuries should not be based solely on current interest rates but should also consider the investment horizon and risk tolerance. For funds needed in the short term, short-term bonds may be more suitable. Conversely, for those with a longer investment horizon, a strategy of gradual purchases while accounting for the potential for further rate increases may be worth considering.* This article has been translated by AI. October 22, 2026 16
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SoftBank's Stock Halves Amid AI Investment Debt Concerns SoftBank Group Corp., a leader in artificial intelligence (AI) investments, has seen its stock price plummet to half of its peak from June. This decline is attributed to mounting debt from extensive AI investments and growing concerns over investment profitability.On October 22, SoftBanks stock closed at 4,305 yen, down 317 yen (6.86%) from the previous trading day. This marks a nearly 50% drop from its peak on June 2. The stock has fallen over 30% this month alone, making it the worst performer among the Nikkei 225 index constituents, erasing all gains from September.Just four months ago, buoyed by the AI boom, SoftBanks market capitalization soared to 49 trillion yen (approximately $413 billion), surpassing Toyota Motor Corp. to become Japans most valuable company. However, as of October 22, its market cap has shrunk to 24.7 trillion yen, effectively halving.Credit risk is also rising. The premium on SoftBanks credit default swaps (CDS) reached its highest level in nearly four years on October 20. A rising CDS premium indicates that the market perceives an increased risk of default for the company.Concerns about funding risks related to AI data center investments have intensified following a sharp decline in the bond prices of U.S. AI cloud company CoreWeave. This has led to heightened scrutiny of the financial health of companies involved in AI investments, raising alarms about SoftBanks investment strategy.SoftBank is investing across the AI ecosystem, including AI infrastructure, energy, and robotics, with a significant portion of its funding sourced through borrowing. In September, the company issued 111 billion yen (approximately $14.68 billion) in corporate bonds to finance its large-scale AI investment plans, marking the largest issuance of speculative-grade bonds in history.Kazuyuki Muramatsu, head of investment management at Nagomi Capital, told Bloomberg, As investors scrutinize the financial health of AI-related companies more closely, SoftBanks vulnerabilities are becoming more apparent. This is due to SoftBank Groups high leverage structure and rising borrowing costs. October 22, 2026 16
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BOK chief's inflation outlook hints rates unlikely to come down before '28 SEOUL, October 22 (AJP) - Bank of Korea Governor Shin Hyun-song on Thursday credited the board’s two successive summer rate hikes with helping cool inflation and steady currency and debt markets while signaling that rates won't likely come down before 2028. Speaking after the monetary policy board unanimously held the base rate at 3.00 percent, Shin described the pause as the payoff from acting early. The BOK raised rates by a quarter percentage point in both July and August after holding them at 2.50 percent for more than a year. “At the August increase, I said we had dealt with a hoe with what would otherwise have required a spade. This hold is the fruit of that hoeing,” he said, invoking a Korean proverb about addressing a problem before it demands a bigger intervention. Shin said the unanimous decision reflected “considerable agreement on economic conditions, including inflation and growth, and on the overall assessment of our preemptive monetary policy.” “Our preemptive response helped keep domestic financial markets stable despite the U.S. Federal Reserve’s rate increase in September, and the (dollar-won) exchange rate also stabilized,” he said. The pause nevertheless came with a firm commitment to maintain a restrictive policy stance. “Growth and inflation appear likely to be stronger than projected in August, so we need to maintain the current restrictive policy stance,” Shin said. “We will respond until we are confident that inflation will settle sustainably at the target level of 2 percent.” That did not mean forcing inflation back to target next year regardless of other economic conditions, he added. “The principle is to achieve the inflation target within the monetary policy horizon while taking other conditions into account, rather than achieving it immediately next year,” he said. “We expect inflation to approach the target level in the year after next.” His remarks point to a prolonged period of policy restraint as inflation remains above target through 2027, with a return toward 2 percent expected around 2028. They do not, however, set a fixed timetable for further increases. Shin said the earlier hikes had given the board room to wait for more evidence before deciding its next move. “Upside risks to growth and inflation appear to have increased compared with the August forecasts, but we judged that it would not be too late to assess them further through incoming data, including third-quarter real GDP and October inflation,” he said. The unanimous pause and Shin’s measured tone supported the won and government bonds. The won strengthened 4.3 won to 1,323.2 per U.S. dollar at around 2 p.m., while government bond yields edged lower. The three-year yield fell 2.4 basis points to 3.808 percent and the 10-year yield declined 3.2 basis points to 4.135 percent. The BOK did not release an updated board interest-rate dot plot in October. The next update is expected in November, at its final rate-setting meeting of the year. An AJP poll suggests economists see further tightening ahead, with 3.50 percent emerging as the most widely expected peak. Four of the six economists who provided a terminal-rate forecast expected 3.50 percent. One forecast 3.75 percent, while another saw scope for rates to reach that level if strong semiconductor-led growth persists. NH Investment & Securities analyst Kang Seung-won also views 3.50 percent as an important threshold, although his assessment of the current policy stance differs from the governor’s. “Rates would need to rise to 3.50 percent before monetary policy can be considered restrictive under the current economic conditions,” Kang said. “A rate cut would only be possible once it is clear that the semiconductor cycle has turned down,” he added. JPMorgan economist Park Seok-gil is among those placing the peak at 3.75 percent. He expects three further quarter-point increases through the second quarter of 2027. Whether the cycle stops around 3.50 percent or extends toward 3.75 percent will depend largely on the durability of Korea’s growth momentum and the inflationary pressure accompanying it. The BOK said Thursday that growth this year and next would “considerably exceed” its August forecasts of 3.3 percent and 2.9 percent, respectively. Strong exports and investment are driving the expansion, while improving income conditions are expected to gradually broaden the recovery in consumption. Recent trade data show little sign of a slowdown in the semiconductor-led expansion. Exports surged 105.4 percent from a year earlier to $61.6 billion in the first 20 days of October, with semiconductor shipments reaching a record $27.5 billion for the period. Inflation, meanwhile, has eased but remains above target. Consumer prices rose 2.9 percent from a year earlier in September, while core inflation excluding food and energy stood at 2.8 percent. Upstream cost pressures remained substantial: producer prices increased 7.7 percent and won-denominated import prices rose 17.6 percent. The BOK expects this year’s headline and core inflation rates to remain broadly in line with its August forecasts of 2.7 percent and 2.5 percent, respectively. The outlook for next year is less favorable. Both measures are now expected to exceed the previous forecasts of 2.3 percent and 2.5 percent as accumulated cost increases feed through to prices and demand-side pressures strengthen. That combination of stronger growth and persistent inflation leaves little room for an early shift toward easing. A sustained slowdown in semiconductors or the broader economy would weaken the case for additional hikes, but Thursday’s pause offered no indication that the tightening cycle was over. The BOK holds its final policy meeting of the year on Nov. 26, when it will also release updated growth and inflation forecasts. October 22, 2026 15 -
Bank of Korea Holds Key Interest Rate Steady at 3.00% The Bank of Koreas Monetary Policy Committee decided on October 22 to maintain the key interest rate at 3.00%. This marks a pause following two consecutive rate hikes in July and August. The committee stated that it is necessary to assess the developments of domestic and external risk factors and the impact of the two previous increases.In its monetary policy direction statement, the committee noted, The domestic economy continues to grow robustly, driven by exports and investment, while inflation remains elevated at around 3%. However, risks to financial stability persist, and uncertainties have increased due to the situation in the Middle East and monetary and fiscal policies in major countries.The committee further explained, The domestic economy is expected to maintain strong growth due to sustained export and investment performance, along with a gradual recovery in consumption. Inflation is projected to exceed target levels for an extended period due to accumulated cost pressures and increasing demand-side pressures. It emphasized the need to manage monetary policy carefully to ensure inflation stabilizes at target levels while monitoring financial stability.The decision to hold the interest rate steady was unanimous among all seven committee members.Full text of the monetary policy direction statement:The Monetary Policy Committee has decided to maintain the Bank of Koreas key interest rate at the current level of 3.00% until the next monetary policy direction decision. The domestic economy continues to grow robustly, driven by exports and investment, while inflation remains elevated at around 3%. However, uncertainties have increased due to the situation in the Middle East and monetary and fiscal policies in major countries, necessitating a careful assessment of the developments of domestic and external risk factors and the impact of the two previous increases.The global economy has seen heightened tensions in the Middle East, but solid growth continues, supported by strong investment in artificial intelligence (AI). Inflation is expected to remain high in the near term due to rising energy prices and supply chain disruptions. In international financial markets, long-term bond yields have surged due to expectations of rising inflation and interest rates in major countries, as well as concerns over fiscal health and corporate bond supply related to AI. Stock prices have shown volatility amid concerns over slowing profitability in the semiconductor sector, despite continued strong corporate earnings. The global economy and international financial markets are expected to be influenced by developments in the Middle East, AI investment outlooks, and changes in monetary and fiscal policies in major countries like the United States.Domestically, the economy has shown stronger-than-expected growth, supported by robust exports and investment. Employment has continued to rise modestly, particularly in the service sector. The outlook suggests that the domestic economy will continue to benefit from favorable semiconductor market conditions, leading to sustained growth in exports and investment, while improving income conditions will gradually boost consumption. Consequently, growth rates for this year and next are expected to significantly exceed the forecasts made in August (3.3% and 2.9%, respectively). However, uncertainties related to the developments in the Middle East, the semiconductor market expansion, and changes in domestic and international financial conditions remain.Regarding inflation, both consumer prices and core inflation (excluding food and energy) continued to rise in the late 2% range in September (2.9% and 2.8%, respectively). Short-term inflation expectations among the public remain in the late 2% range. Inflation is expected to exceed target levels for an extended period due to ongoing cost pressures and increasing demand-side pressures. The inflation rates for consumer prices and core inflation this year are expected to align with the August forecasts (2.7% and 2.5%, respectively), but next years rates are anticipated to exceed previous projections (2.3% and 2.5%). Future inflation trajectories are subject to high uncertainty related to international oil prices, exchange rate movements, the pace of domestic recovery, and the spread of wage increases.In the financial and foreign exchange markets, volatility in key price variables has increased. The won/dollar exchange rate has fallen significantly, supported by improvements in foreign exchange supply due to a large current account surplus, despite the strength of the dollar. Government bond yields initially surged due to worsening conditions in the Middle East, rising international oil prices, and soaring yields on major country bonds, but much of the increase was reversed due to expectations of improved government bond supply. Stock prices have dropped sharply amid concerns over declining profitability in the semiconductor sector. Household loans have decreased as other loans were repaid, while housing-related loans continued to rise, and the upward trend in housing prices in the metropolitan area has resumed.The Monetary Policy Committee will continue to monitor growth trends while ensuring that inflation stabilizes at target levels over the medium term, paying close attention to financial stability. The domestic economy is expected to maintain strong growth due to sustained export and investment performance, along with a gradual recovery in consumption. Inflation is projected to exceed target levels for an extended period due to accumulated cost pressures and increasing demand-side pressures. Attention must remain on financial imbalances related to the housing market and household debt. Therefore, future monetary policy will be determined based on careful assessments of inflation, economic trends, and financial stability conditions, including the timing and pace of any further increases.The decision to hold the key interest rate steady was supported unanimously by all members of the Monetary Policy Committee.* This article has been translated by AI. October 22, 2026 10
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UPDATE: Bank of Korea stands pat, bonds rally on unanimous pause *Updated with Governor Shin Hyun-song’s remarks, central bank statement, data and market response. SEOUL, October 22 (AJP) - The Bank of Korea (BOK) on Thursday kept its key rate steady at 3.00 percent to assess the effects of a half-percentage-point increase across its last two summer meetings, while maintaining a clear restrictive bias. “Since growth and inflation data appear stronger than predicted in August, we should keep up tightening policy stance,” Governor Shin Hyun-song said at a post-meeting briefing, adding the bias would remain until annual inflation rate comes down to the target range of around 2 percent. He projected that goal would be reached in 2027, indicating rates could stay above 3 percent through next year. The economy has kept up a robust growth pace on strong exports and investment, with inflation running around 3 percent, but policymakers unanimously decided to wait it out as upward price pressure from accumulated inflationary factors and downside risks to growth from geopolitical tensions coexist, according to the post-meeting statement. The BOK started lifting the key rate held at 2.50 percent since May last year in July and delivered the second in August. Government bonds rose as investors read hawkish tone from the governor. The two-year government bond yield fell 1.2 basis points to 3.771 percent, while the 10-year yield declined 1.2 basis points to 4.148 percent. The benchmark KOSPI and junior KOSDAQ both fell more than 3 percent on the prosect of higher rates. The won also remained resilient, trading at 1,323.9 per U.S. dollar. The pause follows a stronger assessment of the economy. Shin said the July and August hikes had given the central bank more room to maneuver, allowing it to focus on domestic economic conditions rather than react to market volatility. He described Thursday’s pause as “the payoff” from the BOK’s earlier preemptive tightening. Growth this year and next is expected to “substantially exceed” the BOK's August forecasts of 3.3 percent and 2.9 percent, respectively, as the semiconductor boom is expected to stretch and support exports and investment. Improving incomes should gradually broaden the recovery in consumption, the bank projected. Exports surged 83.7 percent from a year earlier in September, accelerating from 68.9 percent in August. Exports adjusted for working days more than doubled, rising 105.0 percent. The staggering external demand has yet to warm the local economy. Retail sales fell 1.8 percent from the previous month in August, while facilities investment dropped 9.5 percent and manufacturing output declined 5.1 percent. Employment rose by 113,000 from a year earlier in September, with the BOK describing job growth as modest and concentrated in services. Inflation remains a constraint on how long policymakers can wait. Consumer prices rose 2.9 percent from a year earlier in September, easing from 3.1 percent in August. Core inflation, excluding food and energy, slowed to 2.8 percent from 3.4 percent. Households’ expectations for inflation over the next year held at 2.7 percent. The bank warned that accumulated cost increases would continue to feed through to prices while demand-side pressure gradually builds, keeping inflation above its target for a considerable period. This year’s headline and core inflation rates are expected to broadly match the August forecasts of 2.7 percent and 2.5 percent. Next year, however, both are likely to exceed the previous projections of 2.3 percent and 2.5 percent, respectively. Escalating Middle East tensions are pushing up energy costs and disrupting supply chains, even as resilient artificial intelligence investment supports global growth. Financial stability concerns also argued against declaring the tightening cycle over. Household lending had turned lower as repayments of other loans outweighed new borrowing, but housing-related lending continued to grow and home-price gains in the Seoul metropolitan area had accelerated again, the bank noted. Policymakers would continue to watch the housing market and household debt closely as they weigh when, and how quickly, to raise rates further, the bank added. October 22, 2026 09 -
Bank of Korea Meeting: Shin Hyun-song Enters with Smiles Amid Rate Freeze Expectations 22nd morning, in the 16th-floor meeting room of the Bank of Korea in Jung-gu, Seoul, the atmosphere was relatively calm ahead of the Monetary Policy Committee meeting. As this was the first meeting following two consecutive rate hikes, known as back-to-back increases, the medias attention was focused on Bank of Korea Governor Shin Hyun-song.Governor Shin entered the meeting room around 9 a.m., wearing a black jacket and a yellow tie featuring the Bank of Koreas colors. Upon taking his seat, he addressed the press, saying, The weather has become quite chilly. I hope everyone takes care of their health. He then acknowledged the reporters efforts and tapped the gavel three times to commence the meeting. Given that this was a meeting to decide the base rate, he did not provide any additional messages regarding the direction of monetary policy.Monetary Policy Committee members arrived before Governor Shin. At 8:54 a.m., members Hwang Geon-il and Jang Yong-seong entered the meeting room, followed by Kwon Min-soo, Lee Soo-hyung, Kim Jong-hwa, and Kim Jin-il.While the atmosphere was calm, the excitement among reporters in the meeting room was palpable. About 40 individuals, including Bank of Korea executives and journalists, gathered, focusing on the expressions and remarks of Governor Shin and the committee members just before the meeting began.Market analysts widely expect the base rate to remain at 3.00% during this meeting. The Bank of Korea raised the base rate by 0.25 percentage points in both July and August, increasing it from 2.50% to 3.00%. Given the consecutive rate hikes, analysts suggest that it is necessary to assess the cumulative tightening effects and the trends in inflation and the economy during this meeting.According to a survey released by the Korea Financial Investment Association on the 20th, 93% of bond market participants anticipate that the base rate will be held steady at this Monetary Policy Committee meeting, while only 7% expect an increase.Although inflation remains above the target level, it has decreased to the upper 2% range, leading to the prevailing view that there is no urgent need for a third consecutive rate hike. The consumer price inflation rate for September was 2.9% compared to the same month last year, down from 3.1% the previous month. Core inflation also showed a reduced increase, recorded at 2.8%, down from 3.4% the previous month due to the fading base effect of communication fees.The recent stabilization of the won-dollar exchange rate, which has recently dropped to the 1,320 won range, also supports the argument for a pause in rate hikes.However, even if the Bank of Korea decides to keep rates steady, it is expected to maintain a hawkish stance, leaving the possibility of future increases open. This is due to ongoing concerns about demand-side inflationary pressures that have not yet been alleviated.Governor Shin previously stated during a National Assembly audit on the 12th, The nominal GDP in the second quarter increased by 26.4% compared to the same period last year, indicating improved income conditions. Ultimately, we expect inflation driven by demand-side factors to emerge.As a result, this Monetary Policy Committee meeting will likely focus on whether there will be dissenting opinions for a rate hike in response to stronger-than-expected growth and inflationary pressures, as well as what signals Governor Shin may provide regarding future monetary policy direction.Meanwhile, the Bank of Korea is expected to announce the results of its base rate decision around 10 a.m. Following that, at approximately 11:10 a.m., a briefing on the monetary policy direction will be held, where Governor Shin will explain the rationale behind the rate decision and future policy direction.* This article has been translated by AI. October 22, 2026 09
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French Bond Yields Reach 24-Year High Amid Rising Inflation in Europe Rising inflation and fiscal instability in major European countries are increasing pressure for higher interest rates. Frances 10-year government bond yield has surged to its highest level in 24 years, while the UKs consumer price inflation has reached an 11-month high. On October 22, the International Financial Center reported that Frances 10-year bond yield hit 5.01%, surpassing 5% for the first time. This marks an 8 basis point increase from the previous trading day, reaching the highest level since 2002 during intraday trading. The yield gap between French bonds and Germanys, a key safe asset in Europe, has also widened. The difference in 10-year bond yields between France and Germany has expanded to 159.4 basis points, the first time it has exceeded 150 basis points since 2012. Concerns over fiscal health and political instability are contributing to the rise in French bond yields. As the government faces backlash over its 2027 budget proposal, which includes spending cuts, some political leaders are calling for the budgets withdrawal, increasing uncertainty in the political landscape. There are warnings that the decline in French bond prices could lead to shocks surpassing those seen during the Eurozone debt crisis. However, analysts suggest that the European Central Banks (ECB) crisis response tools are stronger than in the past, limiting the potential for a widespread crisis across the Eurozone. In the UK, inflation is also accelerating. The consumer price index (CPI) for September rose by 3.5% compared to the same month last year, marking the highest increase in 11 months. Rising gasoline prices and costs in the services sector are cited as primary contributors. As a result, financial markets anticipate that the Bank of England (BOE) will raise interest rates at its monetary policy meeting in November for the first time in nearly three years. The ongoing inflationary pressures are prompting a renewed need for monetary tightening. The trend of rising interest rates in major European countries is also reflected in the global bond market. The yield on the U.S. 10-year Treasury rose by 1 basis point to 5.12%, while German bond yields increased by 2 basis points to 3.42%. Tensions in the Middle East and concerns over rising international oil prices are exerting pressure across the bond market.* This article has been translated by AI. October 22, 2026 08