On 20th May 2020, the Korean government announced specific plans to create a special purpose vehicle (SPV) aimed at supporting the corporate bond and commercial paper markets.
The government, the Bank of Korea and the Korea Development Bank will set up a KRW10 trillion SPV to help stabilize the corporate bond market, with the possibility of increasing its size up to KRW20 trillion.
The SPV purchasing program will mostly focus on A rated bonds but will also buy ‘fallen angels,’ junk-rated bonds which were downgraded from investment ratings due to Covid-19.
In order to fulfill the purpose of market stabilization, purchasing limits will be established within 2 to 3 percent of the total fund available from the SPV purchasing program for each individual company and business sector.
The Association of Real Estate Funds (AREF) also proposed new fund vehicle on April.