Visit to Texon, the first investee of the Mid-sized Enterprise Fund No.1 on the 5th
Mid-sized Enterprise Meeting Held
Kim Byung-hwan, Chairman of the Financial Services Commission, announced on the 5th that "we will push for an amendment to the Credit Guarantee Fund Act to allow the Credit Guarantee Fund to directly issue P-CBOs."
Chairman Kim made this statement at a meeting with mid-sized companies held at Texon, a semiconductor equipment manufacturing company located in Hwaseong, Gyeonggi Province. He said, "The Financial Services Commission has supported the growth of mid-sized companies by announcing support measures such as issuing P-CBOs for mid-sized companies, establishing dedicated funds and low-interest loans through the customized financial support plan worth 15.3 trillion won in February this year, and launching the Growth Ladder Guarantee Support Program in May."
P-CBO (Primary Collateralized Bond Obligation) is a security issued by bundling corporate bonds issued by multiple companies as underlying assets, which helps diversify the credit risk of individual companies. It is especially used as a means for small and mid-sized companies with low credit ratings, which find it difficult to issue corporate bonds on their own, to raise funds in the financial market with guarantees from the Credit Guarantee Fund.
The attending mid-sized companies commonly requested, "It is necessary to expand the scale of P-CBO issuance and ease interest burdens so that more funds can be raised at lower costs." If the Credit Guarantee Fund directly issues P-CBOs, costs such as asset manager fees can be reduced, potentially lowering the actual financing interest rate for companies by about 0.5 percentage points.
The Financial Services Commission also supports capital expansion through dedicated funds for mid-sized companies. Based on a 250 billion won master fund contributed by five major commercial banks with 50 billion won each, approximately 690 billion won of sub-funds have been raised by matching private funds so far. The Financial Services Commission plans to expand the fund size up to 5 trillion won in the future.
According to the Financial Services Commission, the number and sales of domestic mid-sized companies doubled compared to 10 years ago as of last year, but the proportion of mid-sized companies among all companies still remains at about 1%.
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