KDB산업은행-KDB기술보증기금-KDB신용보증기금 Launch 'Corporate Bond and CP Refinancing Program' on 30th

Rapid Implementation of Follow-up Measures for 'COVID-19 Financial Market Stabilization Plan' on the 24th

[Asia Economy Reporter Kangwook Cho] Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund announced on the 28th that, as part of the government's 'COVID-19 Related Financial Market Stabilization Measures' announced on the 24th, they will launch the 'Corporate Bond and CP Refinancing Program' from the 30th to stabilize the corporate bond and short-term funding markets.

Each institution will first start procedures such as conducting a certain scale of CP purchases and corporate bond refinancing demand surveys independently according to market conditions on the 30th. From April, they plan to actively proceed with the underwriting of corporate bonds worth a total of 1.9 trillion KRW and the purchase of CP worth 2 trillion KRW, totaling 3.9 trillion KRW (KDB 3.4 trillion KRW, IBK 0.5 trillion KRW).

Separately, Korea Development Bank announced plans to establish a system to purchase CP of companies whose credit ratings have temporarily declined due to liquidity difficulties caused by COVID-19 (e.g., A1→A2), in collaboration with the Korea Credit Guarantee Fund (credit enhancement).

After finalizing related internal regulations, systems, and internal approval procedures for each institution next week, the system will be activated from April to actively support the purchase of CP for companies with downgraded credit ratings.

A representative from Korea Development Bank stated, "Through this program, each institution is expected to promptly respond to the crisis situation across the market and strengthen the role of policy finance in supporting the stabilization of the corporate bond and short-term funding markets."

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