Establishment of SPV for Purchasing Low-Credit Corporate Bonds and CP... Purchases Start from the 24th (Update)

[Asia Economy Reporter Kim Eun-byeol] A special purpose vehicle (SPV) to purchase low-credit corporate bonds and commercial papers (CP) has finally been established. It has been about three months since the establishment plan was announced at the emergency economic meeting presided over by President Moon Jae-in on April 22.

On the 17th, the Bank of Korea held an extraordinary Monetary Policy Committee meeting and resolved the SPV loan limit and conditions, as well as the first loan to the SPV. The loan limit is within a total of 8 trillion won, and the amount of the first loan is 1.78 trillion won. The loan is scheduled to be executed next week.

Earlier, on the 8th, the Korea Development Bank held a board meeting and approved the establishment of a subsidiary for the launch of the SPV. Accordingly, the SPV corporate registration was completed on the 14th.

The SPV plans to raise the first round of funds next week and begin purchasing corporate bonds and CPs in earnest. Initially, it will be funded with a total of 3 trillion won, including 1 trillion won in equity and 2 trillion won in loans, and the remaining 7 trillion won will be raised gradually through a capital call method.

By credit rating, all investment-grade non-financial company issuances will be included, but purchases will focus mainly on non-prime bonds (A to BBB ratings). Therefore, unlike the recovering prime corporate bond market, the market for non-prime corporate bonds rated BBB+ and below, which has been depressed, is expected to breathe new life.

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