S. Korea to hold 1 tln won debt sale to ease credit crunch for SMEs

SEOUL, April 9 (Yonhap) -- South Korea's state-run credit guarantee agency said
Thursday that it plans to sell up to 1 trillion won (US$745 million) in debts
backed by a pool of bonds issued by smaller companies with low ratings to ease a
credit crunch.
The state-run Korea Credit Guarantee Fund (KCGF) said the proceeds from the debt
sale will be used for cash-strapped companies.
The debt, called primary collateralized bond obligations (CBOs), will be backed
by a pool of corporate debts issued by dozens of small- and medium-sized
companies.
As of end-March this year, outstanding loans extended to smaller companies stood
at 432.4 trillion won, up 9.9 trillion won from the end of last year.
South Korea is encouraging local lenders to extend loans to companies facing a
credit crunch amid a deeper than expected economic downturn.
The credit guarantee agency also said it plans to cover 600 billion won worth of
loans extended by local banks to self-employed business owners.
The agency will also guarantee repayments for 500 billion won in loans to be
extended to low income earners.
sam@yna.co.kr
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