The automotive segment is expected to become the next beneficiary of a state-led bailout fund aimed at protecting Korea’s mainstay industries from the coronavirus setbacks.

The Financial Services Commission (FSC) is studying to extending the relief fund to auto parts industry under dire straits due to shutdowns and slumped orders from virus pandemic, sources said.

The state fund budgeted at 40 trillion won ($32 billion) to help household Korean companies weather the liquidity distress from the coronavirus crisis can go to companies with a minimum debt of 500 billion won and 300 employees on payroll. But authorities deem they can set aside about 1 trillion won for suppliers to key industries like auto parts.

The first batch of aid went to big airliners and shippers.

The financial aid can be granted in loans, convertible securities, asset purchase, or debt guarantee, according to the fund operation guideline released by the finance ministry last Wednesday.

While reviewing aid for auto parts makers, authorities could discuss relief for SsangYong Motor Co., an SUV-focused producer under India’s Mahindra & Mahindra Ltd. under viability woes. The automaker has 390 billion won in debt that must be repaid by March next year on top of growing losses. Its first-quarter financial statement has been turned down by its auditor, while its Indian parent has withdrawn the initially planned investments earlier last month.

The financial authority may provide the state aid to SsangYong Motor after studying its impact on the local economy, said an FSC official.

As for low-cost carriers that are too small to meet the requirement for the 40 trillion relief fund, the FSC is mulling providing financial aid through bond purchase programs in primary collateralized bond obligations (P-CBOs), a type of security backed by corporate loans with a low credit rating that allows companies to finance money at low costs.

Of the local budget carriers, only Jeju Air and Air Busan are big enough to be eligible for the corporate relief fund.

By Choi Seung-jin and Cho Jeehyun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]