Shinbo to Supply 900 Billion Won as November P-CBO... This Year's Issuance Hits Record High of 6.4 Trillion Won

6.4 Trillion Won Fund Supply Including 5.2 Trillion Won New Capital This Year
Record High New Capital Support 5.6 Times Increase Compared to Previous Year
Serving as 'COVID-19 Financial Vaccine'

[Asia Economy Reporter Park Sun-mi] On the 30th, the Korea Credit Guarantee Fund (KODIT) announced that it issued 900 billion KRW worth of Project Company-Backed Obligation (P-CBO) guarantees in November to support companies affected by the novel coronavirus disease (COVID-19). As a result, a total of 6.4 trillion KRW in funds were supplied through P-CBO guarantees this year, marking the largest scale ever.

KODIT's P-CBO guarantee system supports companies in raising long-term funds directly from the financial market by issuing securitized bonds backed by corporate bonds issued by individual companies as underlying assets.

Earlier this year, as the COVID-19 outbreak caused liquidity tightening in the financial market and difficulties in market-based borrowing for companies, KODIT promptly introduced the "COVID-19 Response P-CBO Guarantee." From May to November, monthly issuances provided 3.5 trillion KRW in new funds to companies severely impacted by COVID-19, such as movie theaters, shopping malls, shipping companies, and airlines.

Additionally, through the "Key Industry P-CBO Guarantee" aimed at strengthening the competitiveness of Korea's core industries such as materials, parts, and equipment, 1.7 trillion KRW in new funds were supplied. Furthermore, 1.2 trillion KRW worth of refinancing issuances played a stabilizing role in the corporate bond market. Efforts were made to continuously lower corporate bond issuance interest rates and significantly reduce the cost of subordinated bond purchases, easing the financial burden on companies. The individual company support limit was also expanded up to 150%, reflecting ongoing institutional improvements.

KODIT's P-CBO guarantee has gained strong popularity in the market as a means for companies to secure funds amid the heightened barriers in the corporate bond market caused by COVID-19, due to its simple funding procedures, avoidance of unsold risk, issuance limits, and interest rate advantages.

KODIT plans to further expand the supply scale of P-CBO guarantees next year to support companies affected by COVID-19. Given that many companies are still facing crisis situations due to the resurgence of COVID-19, KODIT is exceptionally planning to issue guarantees in January and is currently accepting applications from companies.

A KODIT official stated, "Previously, the P-CBO guarantee program was perceived as a financial product only for small and medium-sized enterprises struggling with funding, but recently it has been recognized as a stable funding method for both COVID-19-affected companies and large and medium-sized enterprises with good credit ratings," adding, "The P-CBO guarantee will serve as a reliable safety net not only for companies currently affected by COVID-19 but also for those preparing for the post-COVID era."

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