Yoon Dae-hee (second from left), chairman of KODIT, poses for a photo shoot at the Business Agreement Ceremony for the Introduction of Green Guarantee Projects at Lotte Hotel in Seoul on March 25. From left are Hong Sung-min, chairman of the Korea Photovoltaic Industry Association, Yoon Dae-hee, Park Jin-kyu, vice minister of trade, industry and energy, Jeong Yoon-mo, chairman of the Korea Technology Finance Corporation and Kim Chang-seop, chairman of the Korea Energy Agency. (Photo: KODIT)

Korea Credit Guarantee Fund (KODIT) announced on March 25 that it signed an agreement on the green guarantee business with the Korea Energy Corporation and the Korea Technology Finance Agency at Lotte Hotel in Seoul.

KODIT signed the agreement with an eye towards bringing innovation to the nation’s industrial structure through the promotion of a low-carbon economy and fostering related companies by establishing a financial support cooperation system for new and renewable energy companies.

KODIT plans to actively discover and provide support to new and renewable energy companies with excellent technology for carbon emissions reduction in cooperation with Korea Energy Management Corporation with 25 billion won in contributions from the Ministry of Trade, Industry and Energy.

In particular, as carbon neutrality is emerging as a new paradigm, KODIT will provide incentives such as higher guarantees (95 percent) and reducing guarantee fees (a cut of 0.2%) while ramping up new and renewable energy companies’ financial accessibility by reflecting not only the evaluation of future growth potential but that of climate technology.

“We expect this agreement to serve as an opportunity for the Korean economy to leap into a low-carbon economic structure,” said Yoon Dae-hee, chairman of KODIT. “KODIT plans to actively support Korea’s transition into a carbon neutral society in line with government policies.”

On the other hand, the KODIT said on March 29 that it has implemented special guarantees for export companies to help them overcome difficulties stemming from the spread of the COVID-19 virus.

Companies eligible for the special guarantee programs are companies that export items related to the Korean New Deal and six new growth engines, exporting companies in major industries and service industries, export companies that supply raw materials to exporters and businesses that signed export contracts.

KODIT plans to supply a total of one trillion won worth of new guarantees through this special guarantee program, expanding the guarantee limit according to the size of sales, and support export companies by applying a preferential guarantee ratio (95 percent) and a preferential guarantee fee rate (a cut of 0.3 percentage points).

In addition, KODIT branches will make decisions about the provision of special guarantees of less than 500 million won, instead of KODIT Headquarters, in order to provide support regardless of the amount of already provided guarantees. Thus, those who need them will be able to receive guarantees faster.

“Export companies are a key driver of the nation’s economic growth,” a KODIT official said. “We will do our best to help exporters sharpen their competitiveness and inject vitality in them through the fast supply of special guarantees.”

The following day, on March 30, KODIT announced that it will issue 520 billion won worth of primary-collateralized bond obligations (P-CBOs) to provide support funds to companies hit hard by the COVID-19 pandemic.

KODIT’s P-CBO guarantee system allows companies to raise long-term funds in the financial market by issuing asset-backed securities with corporate bonds issued by individual companies as basic assets.

The P-CBO guarantee program applied to large companies when their corporate bonds are rated BB- or higher and small and medium-sized companies with a K9 rating or higher based on KODIT’s own evaluation system.

Last year, only large companies could use P-CBO guarantees. But beginning this year, small and medium-sized companies can apply for them at KODIT.

KODIT will provide P-CBO guarantees of 520 billion won including 450 billion won in guarantees to one large company, 16 mid-sized companies and 82 small companies.

The average all-in-cost including the acquisition of subordinated securities, is 2.9 percent per year for large companies and 3.5 percent per year for small and medium-sized companies.

“We are planning to issue P-CBOs every month in consideration of demand from companies,” a KODIT official said. “We will continue to support the Korean economy by actively supporting stable long-term funds to companies suffering from the prolonged COVID-19 pandemic.”