South Korea lining up banks to help finance $22 billion arms sale to Poland

HYUNDAI ROTEM

03/11/2023 07:28

By Cynthia Kim and Seunggyu Lim
       Nov 3 (Reuters) - After hitting statutory limits on
import-export lending, South Korea is gathering local banks to
help Poland buy $22 billion worth of weapons in Seoul's largest
arms sale, five people familiar with the matter told Reuters.
    "Five local banks are reviewing a syndicated loan as a
support measure" to help Poland finance its purchase of South
Korean rocket artillery systems and fighter jets, a South Korean
government official said, speaking on condition of anonymity to
discuss ongoing planning.
        Two officials from a Korean defence company confirmed
the syndicated loan plan. Two officials at South Korean banks
said there would be loans, but did not specify the type.
  
    It is the first indication that Seoul is working to remove
Poland's financing hurdles to enable the two countries to strike
South Korea's biggest-ever weapons arms deal, estimated at
around 30 trillion won ($22.72 billion).
    The discussions are a follow-up to the comprehensive arms
agreement between the two nations signed last year, under which
South Korean companies including Hyundai Rotem Co. and Hanwha
Defense Systems Corp will supply tanks, howitzers and fighter
jets.
    That deal was worth $13.7 billion, South Korea's largest to
date.
    The South Korean government official did not elaborate on
the size of the potential syndicated loan. Such a loan is
provided by a group of lenders to a single borrower, often to
finance large deals. 
    The defence company official said that if the syndicated
loan for the next proposed sale wasn't enough, "there could be
other financing measures on the way".
    South Korea's defence exports totalled about $17 billion in
2022, according to its defence ministry, up from $7.25 billion a
year before, as the war in Ukraine opened a door for Seoul's
weapons exports. 
    The 2022 arms deal with Poland established Seoul as a major
player in global weapons exports, largely dominated by the U.S.
and Russia. 
    Seoul is also seeking deeper security ties in Europe, an
ambition with ideal timing for Poland, which borders Ukraine, as
it ramps up arms imports amid tensions with Russia. 
    

($1 = 1,320.4500 won)

 (Reporting by Cynthia Kim, Seunggyu Lim; Additional reporting
by Jihoon Lee; Editing by Josh Smith and Gerry Doyle)
 ((Cynthia.Kim@thomsonreuters.com; 822 3704 5655; Reuters
Messaging: cynthia.kim.thomsonreuters.com@reuters.net))