Deputy Prime Minister Hong Nam-ki Announces Launch of 10 Trillion KRW Low-Credit Corporate Bond and CP Purchase Facility (Update)

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Economy and Finance

[Asia Economy Reporter Kwangho Lee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated on the 20th regarding the establishment of a Special Purpose Vehicle (SPV) for purchasing corporate bonds and commercial papers (CP), including low credit ratings, "We plan to launch it initially with a scale of 10 trillion won," adding, "If necessary, we will also consider expanding the scale up to 20 trillion won."

At the 4th Emergency Economic Central Countermeasures Headquarters (Economic Central Headquarters) meeting held at the Government Seoul Office on the same day, Deputy Prime Minister Hong said, "The newly established SPV will be a new policy cooperation model for crisis response that shares roles among the government, central bank, and policy financial institutions."

He explained, "The government will invest 1 trillion won in the Korea Development Bank, which will then invest 1 trillion won in the SPV. Along with a 1 trillion won subordinated loan, the Bank of Korea will provide 8 trillion won in senior loans to establish the SPV, supporting liquidity for purchasing corporate bonds and CP."

Regarding support, he mentioned, "We will purchase not only high-grade bonds but also non-investment grade bonds and CP," adding, "To stabilize the overall financial market, conditions such as purchase limits for the same company and corporate groups will be imposed to prevent concentrated support to specific companies."

He further stated, "The SPV will operate temporarily for six months, after which the decision to extend will be made based on market stability," and added, "Considering the progression of the novel coronavirus disease (COVID-19) situation, we plan to consider expanding the scale up to 20 trillion won if necessary."

At the meeting, plans for creating public and youth jobs, early revitalization measures for the domestic tourism market, and operational plans for the Industrial Stability Fund (40 trillion won) were also discussed intensively.

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