Housing Finance Corporation Launches PF-ABCP Long-Term Loan Conversion Guarantee

Support of a Total of 1.5 Trillion KRW to Resolve Refinancing Risks at Normal PF Projects

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Korea Housing Finance Corporation will launch the 'PF-ABCP Long-term Loan Conversion Guarantee' on the 17th to support construction companies and securities firms facing difficulties in refinancing short-term funds such as PF-ABCP.

PF-ABCP stands for 'Project Financing Asset-Backed Commercial Paper,' which refers to commercial paper typically maturing in three months, issued based on loan receivables to developers for funding PF projects.

The Housing Finance Corporation stated, "As part of the government's '2023 Economic Policy Direction,' we plan to provide a total guarantee of 1.5 trillion KRW to help construction companies and securities firms struggling due to the real estate market downturn convert existing short-term loans into long-term loans to resolve liquidity issues."

To facilitate smooth guarantee support, the Corporation will expand the application period and guarantee ratio. Applications for guarantees can be made upon project plan approval even before land acquisition is completed, and projects after pre-sale are also eligible. Additionally, by increasing the guarantee ratio from the existing 90% to 100%, the burden on lending banks has been reduced.

However, since this product is intended to support normal PF projects, a thorough review of project feasibility will be conducted. Construction companies and securities firms are required to maintain the credit enhancement conditions from previous loans to ensure that their responsibility for project progress is not diminished.

The Housing Finance Corporation will hold a briefing session for construction companies and securities firms on the 17th to provide detailed information about the product. The PF-ABCP Long-term Loan Conversion Guarantee supports projects that secured funding by December 21, 2022, the date of the related government policy announcement, and applications will be accepted starting from the 17th.