S.Korea pledges over 5 trillion won for builders

SEOUL, Oct 21 - South Korea announced on Tuesday measures to rescue cash-strapped home builders as the sector's troubles put additional pressure on Asia's fourth-largest economy, already in its weakest patch in over a decade.

The government said it would spend 2 trillion won ($1.51 billion) buying unsold new homes from domestic builders and another 3 trillion won buying land from builders who want to pay back debt with the proceeds.

The government also said state-run credit guarantee agencies would help construction firms sell bonds more easily by providing credit guarantees. It also may ease restrictions on home-backed loans in the areas surrounding Seoul next month.

The government also said in a statement financial authorities would supply sufficient won liquidity into local financial markets to help bring down yields on three-month certificates of deposit (CDs), to which banks tie their lending rates.

The measures came in a follow-up to more than $130 billion package of measures announced on Sunday to ease a dollar-funding squeeze at commercial banks and in financial markets.