South Korea wants to help Poland finance the purchase of weapons worth $22 billion, Reuters reported, citing five people familiar with the matter. To this end, the government in Seoul is conducting talks with local banks that would grant Poland a syndicated loan.
“Five local banks are examining the provision of a syndicated loan as a support measure” to help Poland finance the purchase of South Korean rocket artillery systems and fighter jets, said a South Korean government official who spoke on condition of anonymity.
Two representatives of the South Korean arms company confirmed plans to grant a syndicated loan. Two representatives of South Korean banks also spoke about the loan, but did not specify its type.
Poland wants to purchase equipment from South Korea
Reuters noted that the government in Seoul wants to remove financial obstacles to allow the two countries to conclude the largest arms deal in South Korea’s history. Its value is estimated at approximately USD 22.72 billion.
A South Korean government official did not specify the size of the potential loan. A syndicated loan is granted by a group of banks to one borrower, often to finalize large transactions.
According to representatives of the arms company, if the loan is not enough, “other means of financing may appear.”
Contract and credit problems
As recalled, last year Poland and South Korea signed an arms agreement under which Hyundai Rotem Co. and Hanwha Aerospace Co. They are to deliver tanks, howitzers and fighters to our country. The deal was worth $13.7 billion. It was the largest arms deal in South Korea’s history to date.
At the end of July, the “Rzeczpospolita” daily wrote that the total amount of the loan taken out by Minister Mariusz Błaszczak for weapons purchases in South Korea is as much as PLN 100 billion. As reported, the first loan taken out by the Polish government from South Korean banks was in the amount of approximately PLN 36.8 billion ($9.2 billion). With this money, Minister of National Defense Mariusz Błaszczak wanted to finance most of the gigantic order of military equipment placed in Seoul in 2022: 1,000 tanks, 600 howitzers, over 280 long-range Chunmoo missile systems and 48 FA-50 light combat aircraft. “Meanwhile, according to the findings of The Korea Times, Poland has just applied for another loan, this time in the amount of approximately PLN 62.5 billion ($15.6 billion),” Rz wrote at the time.
The daily reported that negotiations were ongoing, but not only between the Polish government and Seoul. Also between South Korean banks and the local government. “Without raising the limits on loans, there will be no one in South Korea to finance Polish purchases. The former were so large that banks in Korea almost exhausted their possibilities of financing arms exports,” it was explained.
Main photo source: KACPER PEMPEL / Reuters / Forum