What if Korea's property project-finance loans spark a crisis?
Korean PF-loan defaults cascading through savings banks and securities firms is a contained credit freeze: short Korean financials and global HY, long vol, as won funding markets seize. This rhymes with the Oct-2022 Legoland/Heungkuk credit shock, when Korean CP and PF spreads blew out and authorities deployed a KRW50tn backstop within days. Transmission stays regional via won money markets. Forward: a larger, more leveraged PF book than 2022 means the backstop must be bigger to prevent securities-firm runs.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Real-estate project-finance defaults cascade through Korean savings banks and securities firms, freezing the won credit market. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Financial conditions ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.