It is quite surprising that we’ve already said goodbye to a third of the year 2013. How are your plans going right now? Is it going well? Or still waiting for the very moment to begin? Well, my friend FSC is also doing its best to put its 2013 resolutions to practice these days. One of the resolutions is “Bring up the corporate financing market with energy”, and actually that’s what I’m going to talk about on today’s post.
It has been told for so long that the market itself is undergoing some problems with instability and uncertainty. Some experts were even worried that there could be additional falters caused by this uncertain situation. That’s why we need a new ‘vitality’ here. By means of that, companies actually need to carry out some ‘reconstruction works’ and cut out unnecessary wastes.
So the FSC brought some additional options to these reconstruction regulations to improve financial sector. To name them, there would be more ‘consistent and constant reconstruction’ to prevent firms in advance from collapsing and damaging the market and other companies. On top of that, there would be some proactive works such as monitoring and supervision over companies concerning construction, shipbuilding, and marine transportation which are quite weak in the status quo. The FSC is even planning to revise the regulation itself to promote efficiency and alertness of the law so that we need not to take our eyes off it!
Another work to bring some energy to companies is to get the ‘corporate bond market’ back into its own pace. It is readily believed that the bond market itself is going fine recently. But when we look deep inside, the market is experiencing bipolarization as small or vulnerable companies gradually lose their chances to issue corporate bond. But as you know, bond itself is very critical for a company to run its business. So the FSC plans to lower the minimum standard and let companies issue bonds with more ease. Qualification of companies will be lowered from the current BBB grade down to BB. It is expected to blow a fresh breeze to the market and narrow the gap between large and medium-small companies.
And the law concerned is going to be different as the FSC plans to amend the regulation and extend the bond-demand range into more stable ones in the long run. Moreover, even major firms would be included in the potential P-CBO[i] recipient list so that this action must be a good incentive to some construction companies dealing with instant liquidity problems.
These are the measures that the FSC has to take into account seriously. It is expected to help provide money to companies more easily. I’m looking forward to encountering more energetic financial market in the near future spurred by these actions. I hope not to hear of the words like uncertainty or instability anymore in the business section of newspapers. I’m sure that you’re going to agree with me on this point.
By Kicheol Lee (firstname.lastname@example.org)
[i] P-CBO is the abbreviation of Primary Collateralized Bond Obligations. It was firstly carried out in 2000 to help companies which have troubles in issuing the corporate bond due to their low credit rating with new issue or rollover.