FSC Launches Program to Support Mid-Sized Companies in Issuing Corporate Bonds Under Their Own Name

Launch of the "QIB Corporate Bond Program for Mid-Sized Companies"
Targeting High-Quality Mid-Sized Companies with No Public Bond Issuance Record
KDB, KODIT, and KFME Collaborate to Recommend Eligible Companies
KODIT Provides Full Principal and Interest Payment Guarantee for Up to 80% of Bond Amount

On April 30, the Financial Services Commission announced that it held a ceremony in Yeouido, Seoul, to commemorate the first issuance of the "QIB (Qualified Institutional Buyer) Corporate Bond Program for Mid-Sized Companies," in collaboration with Korea Development Bank (KDB), Korea Credit Guarantee Fund (KODIT), and the Korea Federation of Mid-sized Enterprises (KFME).

The Qualified Institutional Buyer (QIB) system, introduced in 2012, allows only qualified institutional investors?such as financial institutions, funds, and pension funds with sufficient risk management capabilities?to trade bonds and securities among themselves. This system eases various disclosure obligations and resale restrictions, functioning as a quasi-public offering securities issuance system.

Because market investors decide whether to invest based on a company’s past corporate bond issuance history and current credit rating, the QIB system has mostly been used for overseas securities (KP) issuance by large domestic companies with high credit ratings.

The newly launched "QIB Corporate Bond Program for Mid-Sized Companies" is designed to support high-quality mid-sized companies with no prior public bond issuance records by enabling them to issue corporate bonds through the QIB method, thereby helping them debut in the corporate bond market.

Under this program, KODIT provides a full principal and interest payment guarantee for up to 80% of the total bond issuance, allowing these guaranteed bonds to be sold to qualified institutional investors. The remaining unsecured bonds are underwritten by KDB. Since the corporate bonds issued by mid-sized companies are fully guaranteed by KODIT, they are rated AAA, making them attractive to investors and generating investment demand.

The QIB Corporate Bond Program for Mid-Sized Companies is based on collaboration among multiple institutions. The bonds are issued under the company’s name, and the costs borne by the companies are relatively low.

On this day, two companies?Logen and DKC?participated in the first issuance under the QIB Corporate Bond Program for Mid-Sized Companies, issuing a total of KRW 100 billion in corporate bonds.

Kwon Daeyoung, Secretary General of the Financial Services Commission, stated, "The QIB Corporate Bond Program for Mid-Sized Companies is a dedicated program for mid-sized companies, which are the backbone of the national economy. It marks the first step in shifting corporate finance, which is still centered on collateralized loans, toward direct financing. As a stepping stone for many mid-sized companies to newly enter the corporate bond market, it is highly significant as the starting point for the creation of a public corporate bond market for mid-sized companies."

Kang Seokhoon, Chairman of KDB, remarked, "The QIB Corporate Bond Program for Mid-Sized Companies is a financial tool through which policy financial institutions, together with the capital market, support high-quality mid-sized companies. It will be of great help in securing the resources needed for the growth and competitiveness of issuing companies."

Choi Wonmok, Chairman of KODIT, emphasized, "The QIB Corporate Bond Program for Mid-Sized Companies is the third in KODIT’s set of support programs for mid-sized companies, following the tailored growth ladder guarantee program and direct issuance of P-CBOs. As mid-sized companies, along with small businesses, are also eligible for KODIT’s policy support, we will continue to consider and provide the necessary financial assistance."

Lee Hojun, Vice Chairman of the Korea Federation of Mid-sized Enterprises, said, "I would like to thank the Financial Services Commission, KDB, and KODIT for establishing a dedicated program for mid-sized companies. Although QIB is a new program and may be unfamiliar, we will actively recommend suitable mid-sized companies to help vitalize the program."