S.Korea to double emergency corporate funding package to 80 bln USD

South Korean President Moon Jae-in said Tuesday that his government will double the size of emergency corporate funding package to 100 trillion won (80 billion U.S. dollars) to help companies surmount the temporary liquidity shortage coming from the COVID-19 outbreak.

Moon made the remarks during the second "emergency economic council" meeting, according to the presidential Blue House. The president-chaired meeting was first held last week, unveiling 50 trillion won (40 billion U.S. dollars) worth of financial aid package.

"(The government) will prevent, without fail, companies from going bankrupt because of the shock from the COVID-19. Normal and competitive companies will never go out of business due to a temporary liquidity shortage," Moon said.

Last week's financial aid package was centered on supporting small companies, microbusiness owners and the self-employed, but the expanded package would involve major companies and even conglomerates, if necessary.

Under the expanded package, 29.1 trillion won (23.2 billion U.S. dollars) worth of emergency funds will be provided for small firms in order to help them maintain business operations.

Loan guarantee will be expanded to 7.9 trillion won (6.3 billion U.S. dollars), and assistance for loan from state-run lenders worth 21.2 trillion won (16.9 billion U.S. dollars) will be added to the expanded package.

To stabilize the corporate debt market worried to fall into credit crunch, 20 trillion won (15.9 billion U.S. dollars) of the bond market stabilization fund will be created for the purchase of corporate bonds and commercial papers. It was double the size created during the 2008 global financial crisis.

For companies facing a temporary liquidity crisis, 17.8 trillion won (14.2 billion U.S. dollars) was separately earmarked to support them by purchasing the primary collateralized bond obligations (P-CBO) and other corporate bonds.

As a buffer against the stock market crash, 10.7 trillion won (8.5 billion U.S. dollars) worth of the securities market stabilization fund will be created, over 20 times larger than such fund formed during the 2008 global financial crisis.

Moon said the series of measures supporting companies were aimed to stabilize the labor market in the end given that distressed companies may lead to the rapid worsening of employment.

The president added that measures to help companies maintain their workforce were discussed during the meeting, indicating additional steps coming out in the third "emergency economic council" meeting next week.