Shinbo Provides 740 Billion KRW in Funding to COVID-19 Affected Companies

[Asia Economy Reporter Song Seung-seop] The Korea Credit Guarantee Fund (KODIT) will issue 740 billion KRW worth of Primary Collateralized Bond Obligations (P-CBO) this month to support companies affected by COVID-19.

According to KODIT on the 29th, this issuance was conducted as corporate funding demand increased along with the closing of the 2020 fiscal year. A total of 331 small and medium-sized enterprises (SMEs) and mid-sized companies secured 590 billion KRW in new funds and approximately 150 billion KRW in refinancing funds.

P-CBO is a product issued by pooling newly issued bonds from companies with low credit ratings that find it difficult to directly issue corporate bonds, and then providing guarantees. By using P-CBO, SMEs with low credit ratings can also issue corporate bonds.

At KODIT, large and mid-sized companies with corporate bond ratings of BB- or higher, and SMEs with internal evaluation ratings of K9 (K10 for companies with CPA audit reports) or higher are eligible.

Additionally, to reduce the financial burden of corporate funding costs, the ratio of subordinated bond underwriting for P-CBO guarantees will be lowered. This is expected to result in a 0.3% cost reduction effect based on the issuance amount for SMEs.

A KODIT official stated, “We will strive to provide effective financial support to companies affected by COVID-19,” and emphasized, “We will actively support funds to overcome the crisis and continue to play a strong supporting role for our economy.”

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