Reuters: BoK opens $4bn repo facility and loosens collateral policies after theme park default

The Bank of Korea (BoK) said it will loosen collateral policies for local financial institutions applying for loans from the bank to mitigate the fallout from a debt default by the South Korean developer of theme park Legoland two hours east of Seoul.

Legoland Korea developer Gangwon Jungdo Development Corp. missed payments worth 205 billion won ($144 million) due on Sept. 29. That shocked financial markets given the debts, asset-backed commercial paper guaranteed by the local government, were rated A1 then and were invested by about 10 local brokerages.

The default has led to a sudden freezing of short-term money markets in Asia’s fourth largest economy just as the Bank of Korea’s 250 basis point worth of rate hikes since mid-last year are battering the country’s once-booming property market and local brokerages that are heavily exposed to real estate project finances.

Policymakers has been announcing liquidity-injecting measures one after another since Sunday, including doubling of a corporate bond-buying facility to 16 trillion won. On Thursday, the BOK announced the move on collateral policies to mitigate the tightening of financial conditions in the short-term money markets. The bank will also open a temporary repurchase agreement facility worth about 6 trillion won ($4.24 billion) for local financial institutions to support the smooth functioning of financial markets.

Read the full article

Related Posts

Previous Post
Bloomberg: Traders Seek ECB Action on Collateral Squeeze Warping Market
Next Post
GLMX: building technology to access global money markets

Fill out this field
Fill out this field
Please enter a valid email address.


Reset password

Create an account