The possibility of South Korea defaulting on its credit loans has dipped to the lowest level in over 11 years, with its credit default risk shrinking to lower than those of other major economies such as China, Britain and France, the central bank said Saturday.

According to the Bank of Korea, the country's Credit Default Swap premium on foreign exchange stabilization bonds with a five-year maturity came to 32 basis points, or 0.32 percent, as of Friday, down 9 basis points from 41 bp on Jan. 3.

A CDS premium is additional interest paid on borrowing to offset a country's default risk.

The central bank said the latest reading marks the lowest since Nov. 2007. It is also lower than 36 bp for both Britain and France and 54 bp for China.

"CDS premiums have generally dropped (for most countries) since the start of last month, but it has been falling more rapidly for South Korea," a central bank official said.

The country's CDS premium once reached as high as 699 bp in the midst of the 2008 global financial crisis. It has remained under 100 bp since September 2012, according to the bank.

Meanwhile, the country's outstanding foreign exchange stabilization bonds came to $14.08 billion as of end-December, the highest in the country's history and the largest in the world for a single country.

As of end-November, the country's foreign currency holdings stood at $402.99 billion, the eighth largest in the world.

(Yonhap)