Jungjinkong Issues '2022 Scale-Up Financing'... 44 Companies, KRW 124 Billion Scale

Support for Direct Financing of SMEs Facing Difficulty Issuing Corporate Bonds with Internal Credit

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Lee Young) and the Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced on the 6th that they will support 44 promising SMEs and startups with high growth potential in issuing corporate bonds worth 124 billion KRW through scale-up financing.

Scale-up financing is a project that supports SMEs with growth potential but difficulty in issuing corporate bonds based on their own credit to raise funds through direct financial markets. SMEs can structure the corporate bonds issued through scale-up financing into securitized bonds (P-CBO) and sell them to private investors or SBC to secure the necessary funds.

In particular, scale-up financing enables private investors to participate as purchasers of securitized bonds, raising funds at more than three times the amount of government financial input, thereby increasing the scale of financial support to SMEs. This year, SBC focuses on supporting SMEs and startups in the new industry innovation growth sector. Among the companies participating in this scale-up financing corporate bond issuance, 59.1% belong to the innovation growth sector, with an average sales revenue of 54.1 billion KRW, 106 employees, and an average business history of 20 years. Credit ratings are mostly B+ at 84% (BB- at 16%).

The corporate bond issuance interest rates are applied differentially according to credit rating, with a maturity of 3 years, and the issuance scale per company averages 2.8 billion KRW, ranging from a minimum of 1 billion KRW to a maximum of 6 billion KRW depending on the credit rating. SBC publicly issues scale-up financing as social bonds (Grade 1) with policy objectives such as SME financial support and job creation, and lists them on the Korea Exchange.

Chairman Kim Hak-do said, "Scale-up financing is a project that supports SMEs that have difficulty issuing corporate bonds based on their own credit to raise large-scale funds and take a step forward," adding, "It will contribute to creating new growth engines through direct financial support for innovative growth-stage SMEs."