South Korea's external debt hit a record high in 2012 as foreigners snapped up local bonds amid powerful monetary easing by advanced economies and credit rating upgrades for Korea, the central bank said Wednesday.

The country's external debt totaled US$413.4 billion as of the end of December, up $14.7 billion from a year earlier, according to the Bank of Korea (BOK).

It marked the first time that the country's yearly foreign debt surpassed the $400 billion mark.

But in the fourth quarter, Korea's foreign debt declined by $5.9 billion from a quarterly record high of $419.4 billion in the third quarter as banks repaid short-term foreign borrowing amid tighter rules on bank's foreign exchange derivatives.

Last year, foreign investors snapped up Korean bonds as they were seen as attractive amid aggressive monetary easing moves by major economies and a spate of credit rating upgrades for Korea.

Despite the rising trend of the external debt, Korea saw its short-term debt decline to a six-year low in 2012, indicating that the structure of its foreign debt improved.

The BOK said that foreign investors increased their purchase of treasuries and monetary stabilization bonds, making the portion of long-term external debt rise last year.

Korea's short-term foreign debt fell $10.7 billion on-year to $126.7 billion in 2012. It marked the smallest short-term debt since $113.7 billion in 2006.

Accordingly, the ratio of the short-term debt against the foreign reserves came in at 38.7 percent as of end-December, down 6.1 percentage points from the previous year. It marked the lowest ratio since 31.3 percent at the end of 2005.

Korea's high short-term foreign debt used to be a major headache whenever a financial crisis cropped up as a surge in foreign debt left local banks vulnerable to external shocks.

South Korea's net external credit reached $122.5 billion as of the end of last year, up $24.5 billion from the previous year, it noted. The 2012 reading marked the largest amount in six years. (Yonhap News)