The government said Monday it will provide liquidity worth 6.4 trillion won ($5.6 billion) to help local companies raise funds through selling corporate bonds, as the prolonged slump in corporate financing has stifled firms with a cash squeeze amid the slowing economy.

The government will have state-run financial institutions buy bonds issued by local companies with lower credit ratings and provide them with a government guarantee so they can be sold with less borrowing costs, according to the Financial Services Commission.

Under the measures, the Korea Development Bank will be the main buyer of those corporate bonds and securitize them with a pool of different types of assets into what’s called primary collateralized bond obligations before the state lender puts them up for sale in the market, the FSC said. (Yonhap News)