South Korea Setting Up USD 1.2 bn Shipping Fund

zoom The South Korean government is planning to set up a USD 1.2 billion ship investment fund to boost its shipping industry, Yonhap news agency informed. The fund is expected to be led by local commercial banks and state-run financial institutions including the Korea Development Bank, Export-Import Bank of Korea and Korea Trade Insurance Corporation. The fund would receive 50 percent of the necessary finances in the form of senior bonds from commercial banks while state-run financial institutions would chip in with 40 percent of the fund in the form of subordinated bonds. The remaining 10 percent of the fund would be covered by shipping companies. Under the plan, the Korea Trade Insurance Corp. and the Korea Maritime Guarantee Insurance Co are expected to provide financial security to the companies wanting to either buy or sell vessels thus mitigating the financial risks related to new investments in the sector. By establishing the fund the country wants to bring more stability to the sector and facilitate ship owners investment into new vessels. The decision comes on the back of a very challenging period for the countrys shipping companies that have been struggling to keep their financial health despite deteriorating market conditions. World Maritime News Staff