South Korean Firms Spike Short-Term Debt Before AI Market Crash

South Korean financial companies and corporate firms significantly increased their short-term debt funding during the first half of 2026. Data from the Financial Supervisory Service shows that commercial paper issuance rose 19% to 282.8 trillion won, while short-term bond issuance surged 90.4% to 990.1 trillion won.

The borrowing spike was driven by heightened capital needs for brokerages during a record-breaking rally in the Kospi Index, which was fueled by AI enthusiasm. Additionally, higher long-term bond yields made shorter-term debt more attractive to issuers during this period.

This financial trend reversed in July when global concerns over the AI trade triggered a market meltdown. The subsequent crash caused the Kospi to slide 22% within a single month, disrupting the previous trajectory of short-term debt growth.