Moody's: "Korea's Warrior Procurement and Asset Soundness Decline... Capital Ratio Expected to Remain Stable"

Financial Supervisory Service, Seminar on 'Market Trends of Credit Card Bonds and Risk Assessment of Credit Card Companies'

[Asia Economy Reporter Song Seung-seop] On the 23rd, the Financial Supervisory Service (FSS) held a seminar titled "Recent Trends in the Specialized Credit Finance Bond Market and Risk Factors of Specialized Credit Finance Companies," inviting domestic and international market experts including Moody's.

The seminar, held at the FSS main conference room in Yeongdeungpo-gu, Seoul, was attended by Lee Joon-soo, Deputy Director of Banking and Microfinance, Lee Hee-joon, Deputy Director of Microfinance, Sally Lim, Moody's Hong Kong Representative, Moon Chang-ho, Moody's Korea Representative, and about 40 related parties including Chief Financial Officers (CFOs) of specialized credit finance companies.

The seminar consisted of three sessions, each with 30-minute presentations followed by Q&A and open discussions. Kim Eun-gi, Senior Research Fellow at Samsung Securities, who led Session 1, analyzed domestic bond market trends, conditions for raising funds through specialized credit finance bonds, and future market outlook. Kim Eun-gi said, "Due to year-end book closing and other factors, corporate bond demand has been sluggish recently," but added, "If uncertainties in monetary policy ease, demand for specialized credit finance bonds is expected to increase early next year."

There was also an analysis of major risk factors for domestic specialized credit finance companies. Lee Joo-won, Director at Moody's Hong Kong, stated, "The credit cycle has entered a new phase due to the impacts of COVID-19 and the Russia-Ukraine war," and predicted, "There is a possibility of a global increase in corporate defaults next year due to a negative funding environment." He further noted, "Domestic specialized credit finance companies face concerns over weakened funding structures due to decreased bond demand and deteriorating asset soundness, but capital ratios are expected to remain stable."

Immediately after the seminar, FSS Governor Lee Bok-hyun met with Moody's representatives and evaluated, "The seminar was a very meaningful occasion to hear overseas experts' insights on risk factors of domestic specialized credit finance companies and to discuss ways to overcome crises." He added, "Compared to the past, the response capabilities of domestic financial markets and companies have greatly improved, so we will overcome crisis situations well," emphasizing, "The financial authorities are also doing their best to stabilize the market by swiftly implementing various measures through close consultations with related agencies to prevent market instability from expanding."

The FSS stated, "It is significant that domestic financial companies were provided with opportunities to communicate directly with overseas credit rating agencies," and added, "We will continue to support strengthening networks between domestic financial companies and overseas supervisory authorities and credit rating agencies in the future."

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