The default rate of corporate bills in South Korea improved to its lowest level in 20 months in February as the amount of default corporate bills at cash-squeezed conglomerate Tong Yang declined, data showed Monday.

The corporate bill default rate reached 0.08 percent last month, hitting the lowest level since 0.08 percent in June 2013 when the figure dipped on a fall in default corporate bills at logistics-focused conglomerate STX, according to the data by the Bank of Korea.

The February reading also marks a 0.11 percentage point drop from the previous month.

South Korea's corporate bill default rate soared to 0.52 percent in 1997 from 0.17 percent the previous year as the Korean economy, Asia's fourth-largest, faltered from the Asian financial crisis. It improved to 0.11 percent in 2002 but backtracked to around 0.15 percent during the global financial crisis.

The default rate had improved to the low 0.1 percent level between 2011 and 2012 but started rising again as business conglomerates STX and Tong Yang ran into heavy cash shortages.

While the use of corporate bills has waned in recent years, the default rate of corporate bills is often used to gauge companies' financial stability. (Yonhap)