BOK to inject up to 5 tln won into bond fund

By Kim Soo-yeon
SEOUL, Nov. 24 (Yonhap) -- South Korea's central bank said Monday it will inject
up to 5 trillion won (US$3.33 billion) into an envisioned bond fund aimed at
stabilizing the local debt market which is reeling from a credit squeeze.

The Financial Services Commission (FSC), the country's financial watchdog, plans
to create a 10-trillion-won fund into which banks, the state pension fund and
other institutional investors would pool money to buy financial and corporate
debts. The state-run Korea Development Bank plans to invest 2 trillion won in the
fund.
There have been concerns that cash-squeezed local banks may be lukewarm towards
the fund and unload their government bond holdings to secure much-needed cash,
rattling the debt market in the past few weeks.

Last week, Lee Ju-yeol, a deputy governor at the Bank of Korea (BOK), said the
BOK is not considering buying commercial papers held by companies or certificates
of deposit as a way to provide liquidity to the fund, adding that the government
has not asked the central bank to do so.
sooyeon@yna.co.kr
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