1Q ABS Issuance Down 20.2% YoY... "Impact of Housing Finance Corporation MBS Issuance Reduction"

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[Asia Economy Reporter Lee Jung-yoon] The total issuance amount of asset-backed securities (ABS) in the first quarter of this year decreased by 20.2% compared to the same period last year. ABS refers to securities issued based on assets that are difficult to liquidate immediately, such as real estate, accounts receivable, and mortgage-backed securities. Corporations and financial institutions use them as a means to secure liquidity early.

According to the ABS registration issuance performance data for the first quarter of 2022 released by the Financial Supervisory Service on the 26th, the issuance amount of ABS in the first quarter of this year was 10.9 trillion KRW, a decrease of 2.8 trillion KRW (20.2%) compared to the same period last year. This is due to the reduction in the issuance of mortgage-backed securities (MBS) by the Korea Housing Finance Corporation (HF).

The MBS issued by the Housing Finance Corporation based on mortgage loans amounted to 6.3 trillion KRW, a 29.9% decrease compared to the same period last year. Since the second half of last year, the growth rate of mortgage loans has slowed, leading to a reduction in MBS issuance based on them.

Financial companies such as banks, specialized credit finance companies, and securities firms issued ABS worth 2.4 trillion KRW, an increase of 6.6% compared to the same period last year. Banks issued ABS worth 400 billion KRW based on non-performing loans (NPL), a decrease of 25.6% compared to the previous year. Specialized credit finance companies issued 1.2 trillion KRW, an increase of 17.4%, based on installment finance receivables. Additionally, securities firms issued 800 billion KRW worth of project company bonds secured by collateral (P-CBO), an increase of 12.8%, based on small and medium-sized enterprise corporate bonds.

General corporations issued ABS worth 2.2 trillion KRW based on terminal installment receivables and real estate project financing (PF), a decrease of 8.1% compared to the same period last year.

By securitized asset type, the issuance amount of loan receivable-based ABS was 7.1 trillion KRW, a decrease of 2.7 trillion KRW (27.1%) compared to the same period last year. This includes 6.3 trillion KRW of MBS by the Housing Finance Corporation, 400 billion KRW of NPL-based ABS, and 400 billion KRW of SOC loan receivable-based ABS.

The issuance amount of accounts receivable-based ABS, such as credit card receivables and automobile installment receivables, recorded 3 trillion KRW, a 6.5% decrease. This includes 1.1 trillion KRW of credit card receivable-based ABS, 100 billion KRW of automobile installment receivable-based ABS, 1.3 trillion KRW of corporate accounts receivable-based ABS such as terminal installment receivables, and 500 billion KRW of real estate PF-based ABS.

Furthermore, the issuance amount of P-CBO based on corporate bonds increased by 100 billion KRW (12.8%) to 800 billion KRW.

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