The Financial Services Commission on Friday unveiled an 80 trillion won ($54 billion) support package for the steel industry, seeking to contain fallout from war in the Middle East before it spreads to sectors such as machinery and electronics.
FSC Chairman Lee Eog-weon met with steelmakers and financial institutions, including state-run lenders and commercial banks, in the third of a series of sector-specific meetings aimed at assessing the crisis' impact and coordinating response measures.
"The recent Middle East crisis is intensifying pressure on the industry, as higher logistics costs, supply chain disruptions, and tariff policies in the US and EU add to the burden," Lee said. "We take the risk that the impact could spread beyond steel to downstream industries, potentially triggering a broader chain reaction across the economy, seriously."
The package includes 25.6 trillion won in support from policy lenders, expanded under the recent supplementary budget, and more than 53 trillion won in financing from the private sector to bolster lending to affected companies. Authorities said the scale and scope of the program could be expanded depending on demand.
The government is also moving to ease refinancing pressure in the bond market. Starting this month, it will lower the repayment ratio and subordinated underwriting ratio, among other terms, for small and mid-sized companies affected by the Middle East crisis when they roll over Primary-Collateralized Bond Obligations, or P-CBOs, backed by the Korea Credit Guarantee Fund.
The move comes as government estimates show that about 370 billion won of the 900 billion won in P-CBOs due within a year for crisis-hit small and mid-sized companies is tied to steel-related industries.
From June, the Korea Credit Guarantee Fund will also issue P-CBOs directly, cutting companies’ issuance costs by about 50 basis points.
The FSC said it will also invest in business restructuring and balance sheet improvements across six key industries — steel, petrochemicals, semiconductors, automobiles, displays and secondary batteries — through the sixth Corporate Restructuring Innovation Fund, a 1 trillion won vehicle set to launch this month.
jwc@heraldcorp.com
