To finance Poland’s massive arms purchases from South Korea, the state-owned Korea Eximbank had to borrow on international markets by issuing bonds in Europe, the United States and Singapore. Relying on its AA credit rating, the bank likely added only a thin margin to its own funding costs. Yet its CEO admitted in a meeting with Polish journalists that it probably cannot offer terms as favorable as the European Union’s SAFE mechanism.
The Export-Import Bank of Korea (Korea Eximbank) and the Korea Trade Insurance Corporation (K-SURE) provided loans to Poland for the purchase of K2 tanks, K9 howitzers, FA-50 fighter jets and K239 Chunmoo rocket launchers since 2022. The loans have identical interest rates across all contracts, a financing period of around 20 years, and repayment has not yet begun, executives told Polish reporters in Seoul.
Korea Eximbank raised the funds by issuing dollar-denominated bonds on markets in Europe, the US and Singapore, totaling 20 to 30 billion dollars annually. Its credit rating matches that of the South Korean government at AA from S&P, compared to the EU’s AA+ and Poland’s A-/A-2 in foreign currencies.
A matter of creditworthiness
– We would like to clearly state that we will probably not be able to provide loans on the same terms as European or American institutions. This is because the Korean government does not have the same creditworthiness as European institutions or eurozone countries – said Jang Woong-Sik, senior managing director at Korea Eximbank.
Sigweon (Sikwon) Park, executive director at K-SURE, added that the bank likely added only a small margin to its own bond yields. He stressed that the loans are not comparable to EU’s SAFE or US Foreign Military Financing (FMF), which are more like subsidies or budget support.
Loans vs grants
The Korean officials emphasized that SAFE and FMF are not typical loans but rather grant-like instruments. However, they noted that cheaper financing does not automatically mean better equipment. Both mechanisms restrict purchases to European (65% local content) or American systems, while Korea Eximbank only finances weapons made in South Korea or incorporating Korean technology.
Repayment only begins after actual delivery of the equipment, which is significant for the FA-50 PL variant. The original schedule for these aircraft was 2025-2028, but the delivery was pushed back to mid-2027 through 2029 due to development delays.
Poland remains the largest importer of South Korean weapons globally. The value of contracts signed since 2022 was so large that it initially caused legal and risk-management difficulties, forcing the bank to diversify into projects in the Middle East, South Asia and Latin America.
– The Korean government treats the defense sector as a key industry to support. Financial institutions actively back these projects – said Park.
Źródło: WNP.PL, Fot. ZOOM MON / st. szer. spec. Denis Rubelt/21 bsap.
