Homeplus's application for corporate rehabilitation has increased the likelihood that the asset-backed securities (ABSTB) issued based on its card receivables will become worthless. The outstanding balance of the problematic ABSTB is more than 400 billion won.
According to the financial investment industry on the 7th, credit rating agencies, including Korea Ratings and Nice Credit Rating, downgraded the credit rating of the special purpose company (SPC) SY Plus First from 'C' to 'D' for the ABSTB issued from December last year to February 25 of this year, totaling 373.9 billion won. 'D' indicates a state of non-payment.
The balance of SY Plus Second is 28.02 billion won and will reach maturity on the 10th. Korea Ratings has maintained the credit rating of the ABSTB issued by SY Plus Second at 'C', but stated that it will adjust it to 'D' if unredeemed ABSTB is confirmed at its first maturity.
SY Plus was established as an SPC to securitize Homeplus's card receivables. When Homeplus purchases goods with a purchase-only card, the card company acquires the card receivables from Homeplus, and the ABSTB is issued based on the right to receive the cash flow generated from this. The maturity is relatively short at three months.
The securitization process has been handled by Shinyoung Securities, and the card companies involved include Hyundai Card, Lotte Card, and Shinhan Card. Investment losses due to non-payment are expected to be concentrated on investors who purchased the ABSTB through Shinyoung Securities. The card companies recovered the payments through asset securitization.
The non-payment crisis has already begun. The ABSTB worth 11.8 billion won, which had a maturity on the 5th, was not repaid.
Homeplus has decided to postpone repayment of financial debts while continuing to normally settle trade debts. Internally, the ABSTB is considered a financial debt. However, since it is a bond based on the purchase of goods, the nature of trade receivables may lead to varying outcomes regarding repayment depending on the judgment of the rehabilitation court.