KAMCO Implements Improvements to the 'Secured Bond Issuance Support System'

Expansion of Support Including Relaxation of Eligibility Requirements and Increase in Credit Provision Limits

[Asia Economy Reporter Kwangho Lee] Korea Asset Management Corporation (KAMCO) announced on the 25th that it will improve and implement the 'Mortgage Bond Issuance Support System' to expand financial support for small and medium-sized enterprises (SMEs) and others.

The mortgage bond issuance support system is a program where KAMCO provides credit extension (payment guarantees) to companies issuing mortgage bonds, guaranteeing repayment of up to 80% of the issuance amount in case of principal and interest default, thereby supporting fundraising through bond issuance.

Until last year, KAMCO provided credit extensions worth 172 billion KRW to seven companies through mortgage bond issuance support.

Through this system improvement, KAMCO plans to expand financial support for SMEs by relaxing support requirements reflecting market conditions and corporate needs, increasing credit extension limits, and expanding collateral setting methods and bond issuance methods.

First, KAMCO relaxed support requirements so that companies with a credit rating of BBB- or higher can receive support if they are not classified as marginal companies or have not recorded negative operating cash flow for two consecutive years, and companies with a rating of BB+ or lower can receive support if they are not classified as marginal companies.

Additionally, the credit extension limit, which was uniformly applied at 30 billion KRW, has been segmented by credit rating: companies rated A- or higher can receive up to 50 billion KRW, and those rated between BBB+ and BBB- can receive up to 40 billion KRW.

Regarding collateral setting methods, in addition to the existing real estate trust method, a mortgage right setting method has been added, broadening companies' options to issue bonds using various collaterals such as factories, machinery, and equipment.

In terms of issuance methods, KAMCO has added a private placement method through the QIB market* alongside the existing public offering method to reduce the disclosure obligations burden on companies issuing bonds.

Kim Gwisoo, Head of Corporate Support Division at KAMCO, said, "We hope this system improvement will provide practical help for timely corporate financing and cost reduction," and added, "KAMCO will continue to practice inclusive finance through meticulous support reflecting market conditions and needs."

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