The issuance of asset-backed securities (ABS) based on loan and receivable assets in the first half of this year has been reported to have decreased compared to the same period last year. This decline is due to the reduction in mortgage-backed securities (MBS) issuance caused by the contraction of policy loans. However, the issuance of corporate bond-backed securities (P-CBO) increased slightly during the same period.
The Financial Supervisory Service noted that the issuance amount of ABS in the first half of this year was 21 trillion won, a decrease of 6.5 trillion won (23.6%) compared to the same period last year.
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 issue securities backed by assets that have property value to increase liquidity.
By type of asset-backed securities, the issuance of ABS based on real estate project financing (PF) increased in loan receivables, while the issuance of mortgage-backed securities (MBS) was significantly reduced due to the contraction of policy mortgages. It decreased from 16.17 trillion won in the first quarter of last year to 12.69 trillion won in the same quarter this year, a 21.5% decline. Receivables decreased across card receivables, installment finance receivables, and corporate receivables, declining from 8.46 trillion won to 5.06 trillion won, a 40.2% decrease.
By asset holders, the issuance of ABS by general corporations increased, while the issuance amounts of Korea Housing Finance Corporation (HF) and financial companies declined. General corporations saw a slight decrease in the issuance amount based on terminal installment receivables, but increased ABS issuance based on real estate PF grew from 3.79 trillion won to 6.35 trillion won. In contrast, the Korea Housing Finance Corporation's issuance of MBS decreased from 11.40 trillion won to 5.37 trillion won, while financial companies' issuance decreased from 12.30 trillion won to 9.28 trillion won as the issuance based on real estate PF increased.
As of the end of June, the total outstanding issuance of ABS was 243.1 trillion won, a decrease of 14.1 trillion won compared to the same period last year (257.2 trillion won).
The FSS stated, "The issuance of ABS based on real estate PF, such as public-supported private rental housing development and apartment construction projects, has surged," adding, "In contrast, the issuance of MBS continues to decline due to the contraction of policy loans, such as the end of the special mortgage program offered by the Korea Housing Finance Corporation."