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BOK to extend special loan program for pandemic-hit firms by 6 months

All News 10:35 December 24, 2020

SEOUL, Dec. 24 (Yonhap) -- The Bank of Korea (BOK) said Thursday it will extend a special loan program by six months to purchase corporate bonds, including low-rated debts, to help provide credit to pandemic-hit firms.

The BOK has approved a 10 trillion-won (US$9 billion) loan to the special purpose vehicle, which was set up by the state-run Korea Development Bank.

The special loan program had been set to expire on Jan. 13 next year, but the BOK's policy board approved an extension until July 13, 2021, the central bank said in a statement.

The special program will increase its ratio of purchasing low-rated corporate debts, the BOK said.

Outstanding debt of South Korean firms stood at 1,332 trillion won at the end of September, up 15.5 percent from a year ago.

Analysts have warned that some vulnerable firms may face a credit crunch if an economic recovery from the pandemic is delayed.

South Korea has taken a set of measures to minimize the economic fallout of the COVID-19 pandemic on the local financial system.

The steps include the BOK's "unlimited" purchase of local bonds in repo operations to boost market liquidity.

BOK to extend special loan program for pandemic-hit firms by 6 months - 1

kdh@yna.co.kr
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