SEOUL– South Korea’s financial regulator said Friday it will start buying project-financing asset-backed commercial papers (PF-ABCPs) next week as part of efforts to prop up the country’s short-term money market and ease worries over a credit crunch.
Buying brokerages-guaranteed PF-ABCPs will start in the middle of next week through a special purpose company to be established Friday, according to the Financial Services Commission (FSC).
An ABCP refers to short-term lending backed by such assets as land and buildings to be constructed. It is widely used for construction and development projects.
The planned CP purchase is aimed at injecting liquidity into the short-term money market roiled by a recent default on a municipal-backed debt raised for the construction of the Legoland theme park in the eastern province of Gangwon.
Last week, the FSC announced it will inject over 2.8 trillion won (US$2.1 billion) to support the PF-ABCP market through CP-buying schemes. The regulator said it also plans to buy PF-ABCPs guaranteed by builders sooner or later.
Source: Yonhap News Agency