In the third quarter of this year, issuance of ABS backed by loan receivables increased from a year earlier. Issuance of mortgage-backed securities (MBS) rose on the back of expanded sales of Bogeumjari mortgage loan products, which are long-term home loans. In contrast, issuance of ABS backed by trade receivables edged down.
The Financial Supervisory Service said on the 6th that issuance of asset-backed securities (ABS) in the third quarter totaled 13.3 trillion won, up 2.6 trillion won (23.9%) from a year earlier.
ABS are securities issued on both tangible and intangible assets such as real estate, bonds, and marketable securities. Although they are relatively less liquid, they are used to boost liquidity by issuing securities backed by assets with property value as collateral.
By type of securitized asset, loan receivables increased by 2.2 trillion won (36.2%). The rise was driven by increased securitization of MBS and real estate project financing (PF). However, within trade receivables, issuance of ABS backed by card receivables grew, but basic issuance backed by installment finance receivables fell, resulting in a decrease of 100 billion won (2.8%) from a year earlier.
By asset holder, ABS issuance by the Korea Housing Finance Corporation and general corporations increased, while financial companies held steady. As sales of Bogeumjari loans expanded, MBS issuance by the Korea Housing Finance Corporation rose by 1.1 trillion won (28.7%). After recording 12.2 trillion won in the third quarter of 2023, MBS issuance had steadily declined, but turned upward in the third quarter of this year.
The Financial Supervisory Service (FSS) said, "As sales of Bogeumjari, the Korea Housing Finance Corporation's long-term mortgage loan product, expanded, MBS issuance turned to an uptrend."
For general corporations, there was no change in the scale of ABS issuance backed by handset installment receivables, but issuance backed by real estate PF grew, resulting in a 113.5% increase. For financial companies, issuance by banks and specialized credit finance companies declined, but issuance by securities companies rose slightly as P-CBO-backed issuance increased.
As of the end of Sep., total outstanding ABS issuance stood at 243.5 trillion won, down 15.3 trillion won (5.9%) from the same period a year earlier (258.8 trillion won).