Domestic securities firms have actively sold short-term instruments related to Homeplus, such as commercial paper (CP), short-term electronic bonds (STB), and asset-backed short-term bonds (ABSTB) through retail channels, raising concerns that the scale of individual investor losses will continue to grow. Homeplus raised funds by issuing CP and other instruments right up until its application for corporate rehabilitation.
It is not the fault of the retail sellers. The short-term bond's credit rating was in the A3 range before sale, but it plummeted to default rating afterward. Products like ABSTB are complex, and even if one understands the structure, it is not easy to explain, so many customers may have signed up just seeing the names of associated credit card companies.
According to the financial investment industry on the 9th, over 200 billion won of short-term instruments (CP, STB, ABSTB, etc.) related to Homeplus were sold at Hana Securities' retail channel, one of the major securities firms in South Korea. An industry insider noted, "It is estimated that the sales volume to corporate and individual clients are similar." This means that the scale sold to individual investors alone exceeds 100 billion won at this securities firm.
Instruments like CP and ABSTB are bonds with a maturity of less than one year issued by corporations to raise operating funds. Among them, ABSTB is a financial product issued through a special purpose company (SPC) to liquidate assets like real estate held by corporations, with a maturity of three months. The industry estimates that the amount of damage to individual investors will reach several hundred billion won due to Homeplus' sudden application for corporate rehabilitation.
Retail sellers rushed to sell short-term bonds without recognizing the possibility of a credit rating downgrade. An insider from one securities firm said, "Homeplus issued short-term instruments right up until its application for corporate rehabilitation," adding, "Although the credit rating was not very high at A3, the interest rate was high at 6~7%, making it popular among investors."
Credit rating agencies downgraded Homeplus' short-term bond credit rating to 'D,' the lowest in the speculative grade, immediately after the application for corporate rehabilitation. With the onset of court management, individual investors are now in a situation where the possibility of principal losses cannot be excluded.
There are speculations that many individual clients purchased the short-term bonds without fully understanding the product structure, only recognizing familiar conglomerate names such as Homeplus, Hyundai Card, Lotte Card, and Shinhan Card. For example, ABSTB is a bond liquidated based on the credit card receivables established between Homeplus (the debtor) and credit card companies (the creditors). When Homeplus purchases goods from suppliers using credit cards, the credit card company sells the right to receive payments from Homeplus in the future by securitizing it for investors.
An insider in the securities industry said, "Retail channel staff may not have been well-versed in the product structure, and even if they were, it would have been difficult to explain it concisely," adding, "For individual investors, since familiar names of large discount stores and credit card companies appeared, they likely focused solely on the high 6~7% interest rate while not worrying about the risk of defaults."