The Butterfly Effect of the Affordable Anshim Conversion Loan... Last Year's ABS Issuance Surged by 53%

[Asia Economy Reporter Ji Yeon-jin] The Financial Supervisory Service announced on the 29th that the issuance amount of asset-backed securities (ABS) last year totaled 79.1 trillion won, an increase of 27.4 trillion won (53.0%) compared to the previous year. ABS are securities issued based on assets that are difficult to liquidate immediately, such as real estate, accounts receivable, and mortgage-backed securities, and are used by companies and financial institutions as a means to secure liquidity early. The issuance amount of ABS had grown to 83 trillion won by 2015 but maintained around 50 trillion won thereafter until last year's sharp increase.

The significant increase in ABS issuance last year was due to a surge in mortgage-backed securities (MBS) issued by the Korea Housing Finance Corporation based on mortgage-backed assets. The MBS issuance amount last year was 48.6 trillion won, an increase of 20.5 trillion won compared to the previous year. This is analyzed to have resulted from an increase in mortgage loan receivables transferred by banks to the Housing Finance Corporation following the government's launch of the 'Saemin-type Anshim Conversion Loan' in the third quarter of 2019 to address housing difficulties for low-income households. The Saemin-type Anshim Conversion Loan is a policy loan product that converts variable-rate mortgage loans into fixed-rate products with an annual interest rate of 1.85% to 2.2%. MBS issuance rose from 5.3 trillion won in the third quarter of 2019 to 12.4 trillion won in the fourth quarter of 2019 when the Saemin-type Anshim Conversion Loan began, and surged to 17.9 trillion won in the first quarter of last year. Since then, the quarterly MBS issuance amount has been around 10 trillion won until the end of last year, which is about twice the amount compared to the previous year.

Among financial companies, securities firms showed remarkable issuance. P-CBOs (corporate bond-backed securities) issued by securities firms based on corporate bonds increased by 165.4%, from 260 million won in 2019 to 6.9 trillion won. Specialized credit finance companies issued 8.9 trillion won worth of installment finance receivables, an increase of 17.1% compared to the previous year. Banks issued 2.9 trillion won based on non-performing loans (NPL), a decrease of 200 billion won from the previous year, marking the only decline.

In the case of general companies, telecommunications companies and construction firms issued 11.8 trillion won of ABS based on installment receivables for devices and real estate project financing (PF), respectively. This is an increase of 1.5 trillion won (14.6%) compared to the previous year.

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