Aiming to boost the competitiveness of local shipbuilders, the state-run Korea Trade Insurance Corp., or K-sure, has launched the K-sure Covered Bond Program to provide easier funding for shipowners, officials said Thursday.

The idea is to encourage foreign ship owners to place orders with Korean shipbuilders by offering them low-interest bond funds as an alternative to conventional bank loans.

“Major ship owners have been faced with financial obstacles over recent years as the European banks, amid economic instability, reinforced their regulations and cut down on the loan upper limit,” said an official of K-sure.

The proportion of bank loans in ship financing has decreased substantially, from 51 percent at the end of 2010 to 17 percent last year, the official explained.

By adopting the vessel bond insurance, the Korea Trade Insurance Corp. will not only offer a means of investment for overseas ship owners, banks and bond investors, but also boost the Korean shipbuilders’ competitiveness over Chinese rivals, he added.

The system had been operated by export credit institutions in the United States, the United Kingdom and France, but this was the first case of bond insurance exclusively for maritime vessels, according to officials.

K-sure will initially keep the corresponding budget within a $1 billion limit and expand the amount further from next year.

“We hope that the new system will be of support to our local shipbuilders which have been troubled by the reduction of bank loans,” said Cho Kye-ryoong, president of the state-run organization.

By Bae Hyun-jung (tellme@heraldcorp.com)