The Korea Trade Insurance Corporation (K-Sure) announced on May 18 the launch of a significant trade finance program in collaboration with Hana Bank and HD Hyundai Heavy Industries, aimed at bolstering South Korea’s shipbuilding sector.

Jang Young-jin, CEO of K-Sure, said, “This financing support program is expected to help revitalise the overall shipbuilding industry. We will keep working to expand cooperative trade finance programs that strengthen Korea’s industrial ecosystem and supply chains.”

Program overview and objectives

As South Korea’s state-run export credit agency, K-Sure has initiated this program to provide financial stability to small and medium-sized suppliers of HD Hyundai Heavy Industries, who face increasing funding pressures. 

The initiative is designed to revive the shipbuilding ecosystem by easing financial burdens on subcontractors, thereby strengthening the entire supply chain.

Under the program’s structure, HD Hyundai Heavy Industries and Hana Bank have jointly contributed 28 billion won (approximately $19 million). This capital serves as the foundation for K-Sure to offer preferential guarantees totalling up to 400 billion won (around $270 million) to suppliers within the shipbuilding industry.

Miboo Heavy Industries, the first beneficiary of this scheme, will receive export financing of 5 billion won ($3.3 million) with a 100% guarantee. This provides full risk coverage and simplifies funding access for the supplier.

Industry impact and support expansion

An HD Hyundai Heavy Industries official, according to Korea News Plus, stated that the company is committed to improving support for suppliers struggling with financing.

This initiative would provide essential liquidity and operational stability to subcontractors vital to the shipbuilding process.

K-Sure currently manages cooperative trade finance programs in sectors like automobiles, steel, and consumer goods. The key participants are Hyundai Motor, Kia, HL Mando, POSCO, Musinsa, and Kolmar Korea.

The agency will extend preferential financing programs totalling 2.4 trillion won ($1.6 billion) across various industries. K-Sure also plans to include national strategic sectors like semiconductors, biotechnology, and defence in these programs.