South Korea will expand its asset purchase program over the next six months by buying 10 trillion won ($8.15 billion) of debt from companies below investment grade to ease liquidity woes stemming from the pandemic.

The budget could be bumped up to 20 trillion won if necessary and the program extended beyond the six-month period, Finance Minister Hong nam-ki said after chairing an emergency economy meeting on Wednesday.

The government will put up 1 trillion won in the special-purpose vehicle. State-run Korea Development Bank will shoulder 1 trillion won via cash and loans and the central bank the remaining 8 trillion won through loans.

The latest initiative is separate from the 20-trillion-won lending program launched last month to stabilize bond markets. That fund invested mostly in corporate debt with a credit rating of AA- or higher, which was later widened to A+ or higher. The new credit facility would go further by purchasing bonds and commercial papers of lower-grade firms.

The government said companies and industry sectors that had benefited from the previous arrangement would not be eligible for the latest program.

By Kim Hyo-jin

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