South Korea to give $1 billion to ailing shipping firms during COVID-19
The South Korean government announced it would provide financial assistance of ₩1.25 trillion (around $1 billion) to local shipping companies negatively affected by the coronavirus pandemic.
The measure was prepared by Minister Moon Seong-hyeok, the country’s Ministry of Oceans and Fisheries (MOF), as the worldwide spread of COVID-19 has caused substantial damage to the shipping industry.
According to the Minister, South Korean shipping companies are expected to suffer greater damage after the second quarter of this year, taking into account the time lapse between the global economic deterioration and reduced sales.
Under the plan, Korea Maritime Promotion Corporation (KMPC), a government-backed organization that supports the country’s shipping sector, will provide ₩100 billion in subordinate-debt investments. As explained, the government plans to expand the collateral loan to value (LTV) ratio to up to 95 per cent in order to provide additional liquidity to ships with existing financing. The current LTV ratio is set between 60 and 80 per cent.
What is more, the Korea Development Bank (KDB) and Korea Ocean Business Corp. (KOBC) will provide ₩470 billion for the repayment of maturing debts of HMM (formerly Hyundai Merchant Marine), the country’s largest shipping company.
The coronavirus pandemic has added a major blow to the shipping industry which was already struggling to stay afloat. Hundreds of sailings have been cancelled globally and numerous vessels remain idled due to the outbreak.