On the 26th, POSCO INTERNATIONAL announced that it has received the first global sales insurance (securitization) certificate from the Korea Trade Insurance Corporation. The POSCO INTERNATIONAL subsidiary in Singapore, having received the insurance, can now reduce risks in trade transactions and enhance its financial stability with the introduction of this financial product.
The "global sales insurance (securitization)" is a financial product where a bank purchases the receivables of an overseas subsidiary based on the insurance securities from the Korea Trade Insurance Corporation under a non-recourse condition. The non-recourse condition means that even if defaults occur after the purchase of the receivables, there is no additional responsibility for repayment or other obligations. Overseas subsidiaries can secure operating funds even before the collection of payment, and banks can avoid classifying this as a risky asset, thereby reducing the burden of provisions for bad debts. Since it is a sale rather than a loan, the corporations' liability burden is also reduced.
A representative from POSCO INTERNATIONAL noted that this is "a new successful model that provides stable funding while reducing liability burdens," adding that "through this collaboration, our local subsidiary can secure operating funds at low interest rates and improve its financial ratios."