South Korea’s credit default risks reached a yearly low last week, data showed Sunday, despite North Korea’s high-profile execution of its leader Kim Jong-un’s once-powerful uncle.

According to market researcher SuperDerivatives, the credit default swap premium for South Korean state bonds came to 55.33 basis points on Friday, down 2.44 basis points from the previous day.

The spread reflects the cost of hedging credit risks on corporate or sovereign debt. A rise implies a deterioration in the credit of government bonds and higher costs for issuance. A basis point is 0.01 percentage point.

The latest figure marks the lowest credit default risk for South Korea this year.

South Korea’s risk premium rose steadily in the first half of 2013 as North Korea issued near daily threats in response to Seoul’s military drills conducted with the U.S., sparking geopolitical uncertainties.

In late June, the spread soared to a yearly high of 121.16 basis points amid concerns over the negative impact of the U.S. Federal Reserve’s scaleback in its bond purchasing program.

Market watchers said the latest decline came as there is a slim chance that North Korea’s political upheaval could lead to military provocations against South Korea.

North Korea announced Friday that the 67-year-old uncle, Jang Song-thaek, had been executed after a special military tribunal found him guilty of treason. Jang had been considered the second most powerful man in the reclusive state, and leader Kim’s mentor and regent.

Analysts also attributed the drop in South Korea’s CDS premium to expectations that Asia’s fourth-largest economy may benefit the most from a recovery in the U.S. and other major economies.

In the July-September quarter, the Korean economy grew 1.1 percent on-year on improving domestic demand and a pickup in facility investment, the fastest clip in more than two years. (Yonhap News)