SEOUL, The country’s financial authorities and financial firms decided to launch a 28 trillion-won (US$21 billion) fund next month to help construction firms struggling with the credit crunch and an increased number of unsold new apartments, the regulator said Monday.
Senior officials from the Financial Services Commission (FSC), Bank of Korea (BOK) and Financial Supervisory Service (FSS) met with lenders to real estate development projects.
The plan includes launching the fund aimed at easing the difficulties facing builders, which are also saddled with rising commodity prices.
The lenders will also push back loan repayment deadlines, offer debt-for-equity swaps, and extend new loans to normalize ailing construction and development projects.
The measures came as a preemptive measure to prevent potential fallout from soaring delinquencies in real estate development projects, the regulator said.
The country’s real estate development projects have been hit hard by an abrupt cooling of demand for homes amid fast rising interest rates and an economic slowdown.
South Korea’s central bank raised its key policy rate seven times in a row between April last year and January to 3.5 percent as it has grappled with runaway inflation.
Also, increased commodity prices have worked to increase the costs of construction projects.
Source: Yonhap News Agency