Half of the 1.9 trillion won ($1.54 billion) corporate bond buying program by state-run Korea Development Bank (KDB) will be expedited within the month to help sound Korean companies in distress amid liquidity crunch across markets by virus scare.

KDB reviewed demand for the program among the bonds maturing in April and decided to inject half of the fund this month. Its purchase will be in debt issued by A-rated or higher companies or those above BBB- whose rating has been cut in the aftermath of the COVID-19 outbreak to refinance their bonds maturing this month.

Those facing bond obligations are Hite Jinro (A-rated 143 billion won), Poongsan (A-rated 100 billion won), LS Mtron (A-rated 75 billion won), Hana Asset Trust (A-rated 70 billion won), SK Rent A Car (A-rated 30 billion won), and SK Securities (A-rated 50 billion won).

BBB+-rated Korean Air Lines that has 240 billion won in debt maturing in April would not be eligible.

KDB expects its program will help ease immediate liquidity shortage.

Companies can opt to use the fund to repay instead of refinancing existing debt.

“Companies can issue new debt if market conditions improve. Those with enough cash flow would likely opt to pay off the maturing debt,” said Yoon Won-tae, an analyst at SK Securities.

Separately, KDB will spend half in its 2 trillion won commercial paper buying program jointly set up with state-run Industrial Bank of Korea (IBK) also within April. KDB put up 1.5 trillion won and IBK 500 billion won to purchase commercial papers.

By Pulse

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