Focus on Headline 10/24/2022

**SJ Lee** (0:10)
Focus on Headline. Alright, let's take a look at what major issues are making the headlines here on Focus on Headline. Once again, for this, joining us in the studio, we have our reporters, Han Dan and Jung Sae-beom. Guys, welcome back.

**Tan** (0:27)
Good evening.

**SJ Lee** (0:27)
I have just a cough right now. It's nothing wrong. I had some crackers right before the show, and I think some of them are stuck in my throat right now.

**Tan** (0:36)
Sounds like you need some water.

**SJ Lee** (0:38)
I think I should be okay. I should be okay for now. But nevertheless, let's start things off with some domestic news first.
We talked about the Legoland Korea's default a couple of weeks ago. A bit of a major financial crisis going on with that. It seems like Legoland crisis has ripple effects across the entire Korean financial market. So Sae-beom, you can start us off. Let's get the details of this.

**Sae-beom** (1:02)
Sure. Following the Legoland crisis earlier this month, there are growing worries over the corporate debt market. As we previously reported, it is quite a shocking incident because the top-rated short-term papers for the construction of Legoland were backed by Gangwon-do Province, which means that the local government guaranteed the repayment of the commercial paper. So many are raising questions now about who will invest in commercial papers guaranteed by securities or construction companies if local government-backed CPs can be no longer trusted. As the Legoland crisis has served as a trigger for such widespread concerns about the reliability of asset-backed commercial paper, or so-called ABCP, the interest rate of commercial papers surged by 1 percentage point after the incident from 3.27 percent at the end of last month to 4.25 percent as of October 21st. However, despite such a significant increase in the CP interest rate, even AA-rated securities companies still find it difficult to raise funds due to the frozen investment sentiment.
Against this backdrop, financial authorities vowed to take countermeasures to avoid a liquidity crunch, while Gangwon-do Province reportedly plans to allocate a special budget next month to repay the entire ABCP by the end of January next year.
As the current situation took place due to significantly weakened investment sentiment rather than liquidity itself, we have to wait and see how financial authorities' countermeasures will address the market concerns.

**SJ Lee** (2:45)
That's right. And in regards to this, President Yoon Suk-yeol vowed prompt implementation of the government's liquidity supply programs to resolve the credit and liquidity crunch that was exacerbated by steep rate hikes that we've been talking about, not to mention the default by developers of Legoland.
Tell us more about this.

**Tan** (3:05)
All right. President Yoon, during his daily door-stepping session today, said that a large-scale measure will swiftly be implemented starting today with regards to the liquidity crisis involving Legoland. He said he believes such prompt expansion of liquidity supply programs will help strapped small and mid-sized firms to resolve their liquidity challenges.
Gangwon Province, like Sebel mentioned, which guaranteed to repay $205 billion one financed by a state-led developers, ABCP failed to meet the deadline to repay the debt early this month, sending shockwaves through the local ABCP and corporate bond markets. Now, this is having a spillover effect, and creditors have lost confidence, and investors are shunning even top-rated corporate bonds, causing a credit crunch in the country. The president also expressed strong will to crack down on high interest rate illegal private finances that could exploit the situation and increase the financial risks of citizens during these difficult times. He also vowed that when the most vulnerable citizens are met with default crises, the government will continue to provide necessary support so that they can recover as healthy economic entities.

**SJ Lee** (4:25)
And of course, the government's announcement of its plan to expand funding for liquidity programs to up to 50 trillion won has pushed up Korea's benchmark KOSPI to the 2,250 mark this during the intraday trading. Let's get the figures on that as well, Don.

**Tan** (4:42)
Right. But first, a quick recap of yesterday's meeting held by the financial authorities. They agreed to expand liquidity supply programs to over 50 trillion won amid rising concerns over South Korea's credit and liquidity crunch worsened by steep rate hikes and the Kangwon Land crisis, Kangwon Legoland crisis. They raised the ceiling for corporate bond buying by state-run banks to 16 trillion won while promising to provide 3 trillion won to security firms facing liquidity challenges.
This has led South Korean stocks to advance today to end their 3-day losing streak with construction and tech companies leading the rally. The benchmark cost bureaus 23.04 points to close at 2236.16. Trading volume stood at 434 million shares worth over 6.7 trillion won with gainers outnumbering decliners 622 to 246