Chaean Fund Postpones Purchase of Corporate Bonds to Next Week... Negotiations on Purchase Conditions Fail

[Asia Economy Reporter Hwang Yoon-joo] The first purchase of asset-backed securities (ABS) by the Bond Market Stabilization Fund (BMSF), established to alleviate corporate liquidity crunch, is expected to take place only next week.

According to the financial investment industry on the 8th, the asset management company responsible for purchasing ABS under the BMSF negotiated terms including interest rates with the ABS issuers on the day but failed to finalize the purchase.

The BMSF, after making its first purchase of commercial paper (CP) on the 3rd, decided on the 6th to invest 30 billion KRW in a 3-year unsecured corporate bond issued by Lotte Food, but has yet to decide on purchasing ABS.

The market is expressing concerns about liquidity tightening in ABS as the BMSF’s capital injection is delayed.

According to NICE Bond Evaluation, the interest rate on 3-year 'AA' rated card bonds stood at 1.795% the previous day, with a spread of 74.8 basis points (bp) over the 3-year government bond. The spread between card bonds and government bonds increased by 38.5 bp compared to the end of last month.

Generally, a larger interest rate spread with government bonds means relatively unfavorable issuance conditions and more difficulty in raising funds.

Regarding these concerns, the Financial Services Commission emphasized that "(the BMSF) cannot offer better conditions than the market in terms of interest rates," and stressed that efforts to raise funds independently in the market should come first.

This content was produced with the assistance of AI translation services.