Korea Credit Guarantee Federation, regional affiliates sell W37.9b in long-overdue debt to help 5,639 borrowers

The Korea Credit Guarantee Federation and its regional affiliates will sell 37.9 billion won ($28.7 million) in long-overdue bonds to the New Start Fund, a government debt-relief vehicle. The sale is expected to allow 5,639 borrowers to receive debt cancellation or restructuring support.

The federation announced Wednesday that it and the regional credit guarantee foundations plan to sign a second bond transfer agreement with the New Start Fund on Thursday.

The bonds targeted in this sale have been overdue for seven years or more and total 37.9 billion won — 29.7 billion won held by the federation itself and 8.2 billion won held by three regional foundations in North Gyeongsang Province, Gwangju and North Jeolla Province.

Once the sale is completed, the 5,639 affected borrowers will be eligible for debt cancellation or restructuring through the New Start Fund, depending on their individual repayment capacity.

The federation and its regional affiliates had already signed a first-round bond transfer agreement with the New Start Fund in the first half of this year, selling around 420 billion won in bonds. That transaction allowed approximately 40,000 borrowers to benefit from government debt-restructuring measures.

With the second sale, the total value of bonds transferred to the New Start Fund this year will reach 457.9 billion won.

Selling bonds through the New Start Fund clears long-overdue debt from the books while helping borrowers return to economic activity. Because debt cancellation or restructuring is determined by each borrower's repayment capacity after the sale, the form of support will vary from person to person.

The federation said it plans to use this sale as an opportunity to systematically resolve long-overdue bonds and deepen cooperation with relevant agencies in support of borrowers' financial recovery.

"The federation and its regional foundations will strengthen cooperation with relevant agencies to help borrowers make a financial comeback by resolving long-overdue bonds, and to enable local small business owners to return to economic activity," federation President Won Young-jun said. "We will continue to work to support borrowers' recovery and contribute to revitalizing local economies."