In the first quarter of this year, the issuance of asset-backed securities (ABS) based on loan claims and accounts receivable, as well as corporate bond-based cash-backed obligations (P-CBO), has all decreased compared to the same period last year.
The Financial Supervisory Service announced that the issuance amount of asset-backed securities (ABS) in the first quarter of this year was 8.3 trillion won, a decrease of 43.8% (6.5 trillion won) compared to the same period last year on the 25th.
ABS are securities issued based on tangible and intangible assets such as real estate, bonds, and securities. Although liquidity is relatively low, they are used to enhance liquidity by issuing securities secured by assets that have real value.
By asset type, the issuance of asset-backed securities (ABS) based on loan claims increased for real estate project financing (PF), but the issuance of mortgage-backed securities (MBS) significantly decreased. From 8.2255 trillion won in the first quarter of last year, this year’s first quarter saw a decrease to 5.5114 trillion won, a drop of 33%. The issuance of accounts receivable declined from 5.5418 trillion won to 1.9726 trillion won, a decrease of 64.4% during the same period.
By asset holder, the issuance of asset-backed securities (ABS) by general corporations increased, while the issuance scale of the Korea Housing Finance Corporation and financial companies decreased. Issuance by general corporations expanded, based on public support private rentals and real estate PF for reconstruction projects, increasing from 2.0835 trillion won to 2.6385 trillion won. In contrast, the Housing Finance Corporation saw a reduction in MBS issuance from 5.8828 trillion won to 2.6488 trillion won, while financial companies experienced a significant decrease in ABS issuance based on credit card receivables and installment finance receivables, dropping from 6.8932 trillion won to 3.0618 trillion won.
As of March, the total issuance balance of asset-backed securities (ABS) was 251 trillion won, a decrease of 7.4 trillion won compared to the same period last year (258.4 trillion won).
The FSS noted that due to the termination of the special housing finance loan, a policy financial product of the Korea Housing Finance Corporation, MBS issuance was drastically reduced, and that the improvement in bond market issuance conditions has also led to a decrease in funding demand through the securitization of credit card companies.