Real Estate Market 'Cold Wind'... Real Estate PF-Based ABS Issuance Halved
[Asia Economy Reporter Ji Yeon-jin] The issuance volume of asset-backed securities (ABS) backed by real estate project financing (PF) loan receivables in the third quarter of this year has halved compared to a year ago. This is due to a significant decrease in demand for ABS issued with real estate as collateral amid a downturn in the real estate market.
On the 26th, the Financial Supervisory Service announced that the issuance amount of asset-backed securities (ABS) in the third quarter of this year was 12 trillion won, down 80 billion won (6.4%) from the same period last year. The Korea Housing Finance Corporation (KHF) issued 4 trillion won worth of mortgage-backed securities (MBS) based on housing mortgage receivables, a decrease of 3.4 trillion won (45.5%) compared to the same period last year. The Financial Supervisory Service explained, "Due to a decrease in housing transactions and policy mortgage loan supply, the decline in MBS issuance continued in the third quarter following the first half of this year."
Financial companies issued 6 trillion won worth of ABS, an increase of 2.6 trillion won (75.5%) compared to the same period last year. It was found that specialized credit finance companies increased the issuance of ABS with enhanced credit quality as rising interest rates made it difficult to issue asset-backed bonds. General corporations issued ABS worth 2 trillion won, based on installment payment receivables for devices, maintaining the same level as the previous year.
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ABS backed by real estate project fund (PF) loan receivables totaled 200 billion won, down 53.9%. This decline is attributed to reduced issuance demand due to a decrease in pre-sale and construction volumes amid increased uncertainty in the real estate market. The total outstanding amount of ABS as of the end of September was 230.5 trillion won, an increase of 1.1 trillion won (0.5%) compared to the same period last year.
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