The Bank of Korea (BOK) and state-run Korea Development Bank (KDB) will extend their purchasing of corporate bonds, including low-rated debts, and commercial papers to further stabilize bond markets until the end of this year, the central bank said Wednesday.

In May last year, the BOK approved an 8 trillion-won ($6.64 billion) loan to a special purpose vehicle, which was set up by the KDB, to buy subprime corporate bonds and commercial papers amid the COVID-19 pandemic.

The vehicle had been scheduled to end its purchase on July 13 but will extend its buying until Dec. 31 this year, the BOK said.

In April this year, the delinquency rate for South Korean banks' won-denominated loans rebounded from a record low the previous month as lenders cleared smaller amounts of bad debts.

The rate for bank loans more than 30 days overdue stood at 0.3 percent at the end of April, up 0.02 percentage point from an all-time low of 0.28 percent the previous month, according to government data.

Local banks cleared bad debts worth 600 billion won in April, down 1.1 trillion won from a month earlier.

Banks' loan delinquency rate remains stable mainly because the government has encouraged local lenders to extend loan maturity or delay interest payments to help households and firms struggling to cope with the economic fallout of the pandemic. (Yonhap)