The death of North Korean leader Kim Jong-il could make it tough for local banks and firms to sell foreign currency-denominated bonds due to heightening geopolitical risks, a report showed.

In particular, the sale of Samurai bonds denominated in the Japanese currency could be affected as Japanese investors may be more cautious about developments in their neighboring country, according to a report by the Korea Center for International Finance.

“The sale of Samurai bonds has been brisk this year, but there is a possibility that the news from the North could make things tough for the issuance of foreign currency-denominated bonds and Samurai bonds in particular,” the report said.

The report was based on opinions from major investment banks after North Korea’s announcement of its leader’s death on Monday, the center noted.

This year, South Korea sold $29.6 billion worth of foreign currency-denominated bonds, up 7.4 percent from last year. Of public issues, Samurai bonds accounted for 34.9 percent, up from 10.9 percent last year.

Samurai bond issuance has been relatively brisk as borrowers have sought alternatives to Europe, which is struggling with the deepening eurozone crisis, experts said.

Recently, local companies including POSCO and the Korea Development Bank succeeded in raising a large amount of money by selling Samurai bonds.

Experts are concerned that the North Korean leader’s death and rising geopolitical risks could put a brake on issuance of foreign currency-denominated bonds.