Signing of Mutual Growth Financial Support Agreement Utilizing P-CBOs
Improving Financing Conditions Through Capital Market Linkage
Korea Housing Finance Corporation (President Kim Kyunghwan) and Korea Technology Finance Corporation (Chairman Kim Joungho) signed a 'Mutual Growth Financial Support Agreement for Scale-up Support of Technology SMEs in the Busan, Ulsan, and Gyeongnam Regions' on December 30 to promote the growth of technology-based small and medium-sized enterprises (SMEs) in the Busan, Ulsan, and Gyeongnam (BUK) region and to improve their financing conditions.
Korea Housing Finance Corporation and Korea Technology Finance Corporation are signing a 'Mutual Growth Financial Support Agreement for Scale-up Support of Technology SMEs in the Busan, Ulsan, and Gyeongnam Regions.' Photo by Korea Housing Finance Corporation
Through this agreement, Korea Housing Finance Corporation will participate in the purchase of P-CBOs (Primary Collateralized Bond Obligations) to support the issuance of corporate bonds by regional technology SMEs, thereby aiming to reduce their financial costs.
Korea Technology Finance Corporation will be responsible for the identification and evaluation of eligible technology SMEs, as well as providing credit enhancement and overseeing the overall issuance process of P-CBOs.
P-CBOs are asset-backed securities issued with a pool of newly issued corporate bonds as underlying assets, with credit enhancement provided by guarantee institutions. This system supports SMEs in raising funds through the direct financing market. It serves as a stable financing tool for SMEs with relatively low credit ratings that face difficulties accessing the capital market based solely on their own creditworthiness.
Going forward, the two organizations plan to: expand the issuance of P-CBOs backed by corporate bonds and other assets issued by technology SMEs in the BUK region; enhance capital market access for companies with strong technological capabilities but difficulties in securing funds; and establish a sustainable financial support cooperation system linking policy finance and the capital market.
Chae Seok, Director of Korea Housing Finance Corporation, stated, "This agreement is significant in that it establishes a foundation for mutual growth with regional technology SMEs through cooperation among public institutions in Busan," and added, "We will continue to develop financial support models that can contribute to revitalizing the regional economy."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
