South Korea's Financial Services Commission said on Tuesday it will expand new policy financing support to 26.8 trillion won to ease corporate burdens caused by instability in the Middle East. It also said it will ease refinancing pressure for Credit Guarantee Fund bond-backed securities (P-CBOs).

FSC Chairman Eok-won Lee (이억원) said at an "Industry-Finance Meeting on Middle East Situation Affected Industries" held that day, "We will ease liquidity difficulties for affected companies, including export-import firms and partner companies."

Policy financing institutions are currently applying maturity extensions and repayment deferrals on existing loans, and are also expanding new funding support programs. Support was first increased to 24.3 trillion won from 20.3 trillion won, and is expected to be expanded further to a total of 26.8 trillion won through a supplementary budget.

Private financial firms are also joining the support effort, with a program to supply more than 53 trillion won in new funds being 추진, centered on the top five financial holding companies.

In addition, refinancing pressure for P-CBOs of small and medium-sized enterprises and mid-sized companies affected by the Middle East situation will be eased. The repayment ratio for refinancing within 1 year will be lowered to 5 percent from the previous minimum of 10 percent, and the subordinated purchase ratio and the additional spread will each be reduced by up to 0.2 percentage points and 0.13 percentage points.

The P-CBO outstanding balance to which these conditions apply is about 900 billion won, of which the petrochemical sector is estimated at about 170 billion won.

Financial authorities will also pursue support to stabilize industries. Korea Development Bank and the Export-Import Bank of Korea are discussing liquidity support measures for the Korea National Oil Corp's crude oil procurement.

In addition, the sixth corporate restructuring innovation fund worth 1 trillion won is set to complete formation within this month and plans to invest in business restructuring and financial structure improvement for six key industries, including petrochemicals.

The Financial Services Commission said it plans to continue a series of meetings by major industries starting with this meeting and expand financial support.