Starting Next Month on the 2nd, Corporate Bond Purchases Begin Through Chaean Fund

Son Byung-du, Vice Chairman of the Financial Services Commission, to Hold 5th Financial Situation Review Meeting on COVID-19 on the 27th
Review of Preparation and Execution Status of the '100 Trillion KRW+ Livelihood and Financial Stability Package Program' Announced on the 24th
"The Most Important Thing Is Swift and Accurate Execution... Ensuring Clear Policy Effects"

Son Byung-du, Vice Chairman of the Financial Services Commission, is conducting a conference call to review the financial situation at the Financial Services Commission in the Government Seoul Office Building on the 27th.

[Asia Economy Reporter Jo Gang-wook] Starting as early as the 2nd of next month, corporate bond purchases through the Bond Market Stabilization Fund will commence.

On the 27th, the Financial Services Commission held a 'Financial Situation Review Meeting' chaired by Vice Chairman Son Byung-du, where they reviewed the preparation and execution status of the '100 Trillion KRW+@ Livelihood and Financial Stability Package Program' announced on the 24th.

Previously, on the 24th, the FSC held an Investment Risk Management Committee meeting and decided on the first capital call amounting to 3 trillion KRW related to the Bond Market Stabilization Fund. They also began detailed discussions to double the existing commitment size of the fund from 10 trillion KRW to 20 trillion KRW.

Vice Chairman Son stated, "Funds are expected to be injected into the corporate bond market as early as the 2nd of next month," adding, "We have also officially started detailed discussions to double the fund's commitment size."

The Securities Market Stabilization Fund was launched on the 25th with related securities institutions such as the Korea Exchange, Korea Financial Investment Association, Korea Securities Depository, and Korea Securities Finance Corporation contributing 760 billion KRW. The FSC explained that the private sector is currently conducting final coordination on the fund structure and management methods through a consultation meeting with contributing financial companies.

Additionally, the financial authorities and financial sector signed a financial support agreement on the same day to overcome the COVID-19 crisis. Accordingly, starting from the 1st of next month, a 1.5% interest rate on commercial bank loans, extension of loan maturities, and interest payment deferrals across all financial sectors will be implemented.

Regarding delays in screening due to the surge in guarantee demand at the Korea Credit Guarantee Fund (KODIT), the FSC plans to take swift measures to partially disperse KODIT’s funding demand by expanding the industries eligible for guarantees under the Korea Credit Guarantee Fund for guarantees below a certain amount and delegating the entire guarantee screening process to banks.

The FSC explained that from the 24th to the 26th, immediately after the announcement of the measures, about 3.5 trillion KRW of short-term liquidity was supplied to securities firms through the Bank of Korea and Korea Securities Finance Corporation. Starting from the 30th, Korea Development Bank and Industrial Bank of Korea will purchase CPs, commercial paper, and asset-backed securities, and plans to establish a joint CP purchase organization between Korea Development Bank and Korea Credit Guarantee Fund are underway.

Alongside this, an on-site communication system will be established centered on the FSC’s Emergency Financial Situation Room, the Financial Supervisory Service’s Consumer Protection Bureau, and regional support offices.

The FSC decided to actively resolve on-site difficulties and reflect them in system improvements through biweekly conference calls and site visits starting from the 6th of next month. Initially, conference calls will be the norm, with site visits to be conducted once the COVID-19 situation eases.

Vice Chairman Son emphasized, "Now that the specific scale and details have been announced, the most important thing is swift and accurate execution," adding, "We will prepare and execute the 100 trillion KRW+@ package program to ensure it leads to definite policy effects."

Meanwhile, as of the 24th, a total of 326,000 consultations have been conducted, with 152,000 cases amounting to 13.4 trillion KRW in funds supported.

A total of 14 institutions participated in the meeting, including the Ministry of SMEs and Startups, Bank of Korea, Financial Supervisory Service, policy financial institutions, the Korea Federation of Banks, and Korea Securities Finance Corporation.

This content was produced with the assistance of AI translation services.