Seoul: Finance authorities have announced the expansion of policy financing programs and the easing of bond refinancing burdens to support companies impacted by the ongoing crisis in the Middle East, according to statements from the financial regulator on Tuesday.
According to Yonhap News Agency, Financial Services Commission (FSC) Chairman Lee Eog-weon addressed the need for these measures during a meeting with officials from the petrochemical and refining sectors, which are facing significant challenges due to global supply disruptions and increased costs linked to the conflict involving Iran.
The government has increased the size of emergency funding programs from 20.3 trillion won (US$13.47 billion) to 24.3 trillion won as of late last month, with plans to further expand the funding to 26.8 trillion won through a supplementary budget, the FSC reported. Additionally, private financial institutions, including five leading financial holding groups, are anticipated to contribute over 53 trillion won in new financing initiatives.
Beginning Tuesday, small and midsized enterprises affected by the Middle East crisis will have the opportunity to lower repayment ratios and reduce interest premiums when refinancing primary collateralized bond obligations (P-CBOs) within a one-year timeframe. P-CBOs are securities backed by a collection of corporate bonds.
The Korea Development Bank and the Export-Import Bank of Korea are engaged in discussions to provide liquidity support for crude oil procurement by the Korea National Oil Corp. This move aims to stabilize the petrochemical and refining industries.
A corporate restructuring fund worth 1 trillion won will be launched this month, targeting investments in six key industries, including petrochemicals, to facilitate business restructuring and financial enhancements, the FSC added.
During the meeting, industry representatives expressed concerns that prolonged disruptions might result in production halts, despite their efforts to secure emergency raw materials from the United States, Africa, and other regions. They emphasized the need for ongoing financial assistance.