First-Half ABS Issuance Surges 98% to 43.6 Trillion Won... "Driven by Increase in Mortgage Loan Receivables"

[Asia Economy, reporter Park Jihwan] The issuance of asset-backed securities (ABS) surged in the first half of this year as the volume of mortgage loan receivables transferred by banks to the Korea Housing Finance Corporation increased due to the launch of the "People-Friendly Safe Conversion Loan" and changes in the loan-to-deposit ratio regulation.

According to the Financial Supervisory Service's analysis of ABS registration and issuance performance for the first half of the year released on the 31st, the total amount of ABS issued reached 43.6 trillion won, up by 21.6 trillion won (98.2%) compared to the same period last year.

The increase in issuance volume was mainly due to a significant rise in the issuance of mortgage-backed securities (MBS) by the Korea Housing Finance Corporation. In the first half of the year, MBS issuance amounted to 28.7 trillion won, an increase of 18.3 trillion won compared to the same period last year.

The government launched the "People-Friendly Safe Conversion Loan," a policy loan product introduced in the third quarter of last year, which allows borrowers to switch from existing variable-rate mortgage loans to low-interest fixed-rate mortgage loans. In addition, as part of a policy to boost corporate lending, the loan-to-deposit ratio regulation was revised in January, raising the weighting for household loans by 15% and lowering it for corporate loans by 15%. As a result, the volume of mortgage loan receivables transferred by banks to the Korea Housing Finance Corporation increased.

In the first half of the year, financial companies issued 9 trillion won in ABS, up 1.7 trillion won from the same period last year. Banks issued 1.2 trillion won in ABS backed by non-performing loans (NPLs), specialized credit finance companies issued 4.9 trillion won in ABS backed by installment finance receivables and similar assets, and securities companies issued 2.9 trillion won in primary collateralized bond obligations (P-CBOs) backed by corporate bonds.

General corporations issued 5.9 trillion won in ABS, an increase of 1.6 trillion won (37.2%), backed by assets such as installment receivables for mobile devices, real estate project financing (PF), and future receivables.

Notably, ABS backed by corporate sales receivables increased from 3.7 trillion won in the same period last year to 5.2 trillion won in the first half of this year. This was due to an increase in ABS issuance backed by airline ticket receivables. Korean Air, which had not issued any ABS in the previous year, issued a total of 1.3 trillion won in ABS over four rounds.

As of the end of June, the total outstanding balance of ABS stood at 209.4 trillion won, up 18.6 trillion won (9.7%) from the end of last year.

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