Coronavirus Relief Measure Extended

Bank of Korea, the finance ministry and state-run Korea Development Bank have announced the extension of corporate bond and commercial purchases by its SPV for 6 months, the scheme will now run until July.

• Under the extension BOK will also allow the entity to buy more bonds with A-BBB ratings by raising the purchase ratio to 75% from 70%.
• South Korea set up the KRW 10tn SPV to directly purchase commercial paper and bonds, in a bid to calm local debt markets hammered by the coronavirus pandemic. The SPV can buy subprime debt as well as bonds with high credit ratings and had an initial period of 6 months.
• The SPV targets AA-rated corporate debt with maturities shorter than 3-years, and some BB-rated debt if its credit rating was recently downgraded as a result of the pandemic.