``Gov’t To Provide 1 Trillion Won For Companies` Facility Investments``

The government has decided to provide loans amounting to 1 trillion won through the Korea Development Bank (KDB) to domestic companies during the third quarter of this year (July-September) to accelerate companies’ facility investments.

In addition, the government plans to help small and medium enterprises concentrating in manufacture business by issuing the foreign currency-denominated bonds with warrant (BWs) amounting to $ 300 (390 billion won).

The government decided this at the financial policy consultation meeting Wednesday at the Federation of Banks building, Myongdong, Jung Ku, Seoul.

Moreover, the government has decided to increase the guarantee rate provided by the Credit Guarantee Fund and the Technology & Credit Guarantee Fund from the current range of 70 percent to 80 percent to 90 percent. The amount of screening standard for the business branch also increased from under 1.5 billion won to under 3 billion won.

The KDB plans to lower the interest rates of preferential loans for facility investments 1-2 percent from the current prime lending rate of 9 percent, and the expiration date will be expanded from 5 years to 8 years.

The government also has decided to increase the volume of the primary collateralized bond obligations (CBO) for companies to ease the financial burden of the corporation bonds, which will expire during the latter half of this year.

The government decided to inject 5-6 trillion won of public funds into the Seoul Guarantee Insurance to boost the stock market, and as a first step, it will inject 1 trillion won of the deposit insurance fund bonds on Friday.

In addition, the government also promised to introduce employee stock ownership plans (ESOP), and decided to introduce exchange-traded fund (ETF) as well as the pension-investment fund.

Choi Young-Hae moneychoi@donga.com