KEPCO to borrow from banks to stabilize bond market
Korea Electric Power Corp. headquarters in Naju, South Jeolla Province / Korea Times fileBy Lee Kyung-minCommercial lenders will grant up to 10 trillion won ($7.2 billion) in loans to Korea Electric Power Corp. (KEPCO) before the year's end, to limit further financial market dislocation sustained by top-rated, government-guaranteed bonds issued by the state-run energy firm, according to market participants, Wednesday. The government-recommended measure is intended to help KEPCO find a line of credit with banks for operating funds, instead of issuing more AAA-rated bonds, which have almost exclusively absorbed investment funds over the past few months.This measure in turn will lower the recent sharp increase in corporate bond yields, stabilizing the short-term market turbulence, the government said. Data from the Bank of Korea showed that the spread between three-year AA- corporate bonds and government-issued bonds was 1.14 percentage points on Oct. 14 ― the widest since September 2009 during the global financial crisis. The wider the figure, the harder it is for firms to find a line
