Loans priced at bank's bond issuance rate

Crisis response program expanded from 7 trillion to 8 trillion won

[Provided by Export-Import Bank of Korea]
[Provided by Export-Import Bank of Korea]

The Export-Import Bank of Korea announced Thursday it will offer an ultra-low-interest "mutual growth loan" to small and medium-sized enterprises struggling with a prolonged surge in exchange rates.

The program targets SMEs that can demonstrate losses from the high exchange rate environment. Loans are designated for raw materials import payments, and the bank plans to operate the program with a total ceiling of 300 billion won ($193 million) through the end of this year. The lending rate is set at the bank's own bond issuance rate — as of Thursday, the six-month yield on Export-Import Bank bonds stood at 3.2 percent per annum. Refinancing loans from other financial institutions are excluded.

The bank put the measure together on an emergency basis to ease the interest burden on SMEs facing a double squeeze of import payment costs and liquidity shortfalls amid the sustained high exchange rate environment. It falls under the bank's "Crisis Response Special Program," whose annual support ceiling the bank is expanding from 7 trillion to 8 trillion won this year.

The bank is also offering, free of charge, a currency-conversion option that allows borrowers to freely switch their loan denomination between foreign currency and won to help manage risks from sharp exchange rate swings.

In the second half of this year, the bank plans to establish a 100 billion won blind fund to support the competitiveness of early-stage venture companies and SMEs.

"Because lending rates for SMEs are determined based on the bank's strong credit standing, companies carrying heavier financial costs will feel a greater effective rate reduction," an Export-Import Bank official said. "We will continue to serve as a solid financial pillar so that SMEs — the backbone of our economy — can grow without being shaken by changes in the external environment."


hyuk@heraldcorp.com