Gov¡¯t sharply increases credit guarantees

In a bid to ease financing difficulties at local companies, the government decided to boost the credit guarantees offered by state-run institutions by 21 trillion won to 54 trillion won this year.

Consequently, up to 73 trillion won in funds will become available for companies this year. The outlay marks an increase of 30 trillion won from last year.

The Ministry of Finance and Economy implemented the measure, which was announced Tuesday, to expand credit guarantees for local firms.

Of the 54 trillion won, 37 trillion won will used to back the debts of small- and medium-sized enterprises and venture firms and another 10 trillion won will be devoted to renewing the maturing corporate bonds of large conglomerates. Officials said that another 7 trillion won would be used to back fresh loans to 235 companies judged as ¡°viable¡± on Nov. 3 last year.

Large conglomerates will be able to renew corporate bonds worth about 20 trillion won through the guarantee of 10 trillion won in primary collateralized bond obligations (CBO), while the 235 companies will be able to get their hands on about 10 trillion won in funds through the guarantee of 7 trillion won.