Korea’s corporate debt is expected to reach $2 trillion by 2017 as non-financial firms increasingly issue debt and take out loans to service their obligations, a report by Standard & Poor’s said Sunday.

This would lead debt to account for 122 percent of the country’s gross domestic product, or to the level seen in 2009, raising concern over Korea’s business fundamentals.

S&P noted that it is generally dangerous for the corporate debt-GDP ratio to surpass 90 percent.

Non-financial firms’ debt amounted to some $1.4 billion as of September last year when the ratio was the fourth-highest among 10 major economies in Asia Pacific. Hong Kong stood at 174 percent followed by China at 134 percent and Malaysia at 130 percent.

The global rating agency added that China, Korea’s top trading partner, posed the highest risk in the region as its corporate debt-GDP ratio was projected to reach 150 percent by 2017.

S&P issued an alert over Korea in 2009 when its corporate debt accounted for over 120 percent of its economic output amid the global financial crisis.

Korea maintained its ratio at around 90 percent between 2007 and 2008, but it has continued to rise above 100 percent since 2009.

By Chung Joo-won (joowonc@heraldcorp.com)