The company had decided in 1993 to build the world’s fifth largest steel plant and there was cost escalation of the project from Won 2,700 bn to Won 5,700 bn while the steel demand had turned sluggish. The situation deteriorated further in July 1997 when Kia, Korea’s third largest car company asked for an emergency bank loan to avoid bankruptcy.
In the euro area, there was an expectation that the economic fundamentals of the member countries would converge through the introduction of the single currency. Accordingly, the government bonds of the member countries quickly came to enjoy terms of issuance mirroring those of Germany.