Last Year ABS Issuance Amount 51.7 Trillion... Up 2.3 Trillion YoY

[Asia Economy Reporter Ji-hwan Park] Last year, the issuance amount of Asset-Backed Securities (ABS) slightly increased due to the surge in real estate transactions.

On the 20th, the Financial Supervisory Service announced that the ABS issuance amount in 2019 was 51.7 trillion KRW, an increase of 2.3 trillion KRW (4.7%) compared to the previous year.

Asset-Backed Securities refer to securities issued based on tangible or intangible securitized assets (Underlying Assets) held by companies or banks, such as real estate, accounts receivable, securities, mortgage loans, and other property rights.

The ABS issuance amount decreased from 57.6 trillion KRW in 2017 to 49.4 trillion KRW in 2018, but turned to an increasing trend last year, reaching 51.7 trillion KRW.

By asset holder, the Korea Housing Finance Corporation (a public corporation) issued 28.1 trillion KRW of MBS (Mortgage-Backed Securities) based on mortgage loans, marking a 13.3% increase compared to the same period last year. A Financial Supervisory Service official stated, "This is attributed to the new supply of the low-income安心 conversion loans in the fourth quarter of last year, the accompanying increase in the use of existing Bogeumjari loans, and the increase in banks' transfers of individual mortgage loans to the Korea Housing Finance Corporation due to the implementation of the revised loan-to-deposit ratio regulation."

Additionally, financial companies issued 13.3 trillion KRW of ABS based on non-performing loans (NPL) and installment finance receivables, and general companies issued 10.3 trillion KRW of ABS based on terminal installment payment receivables and real estate project financing (PF).

By securitized asset type, ABS based on loan receivables and ABS based on accounts receivable increased by 1.8 trillion KRW and 100 billion KRW respectively, resulting in issuance amounts of 31.6 trillion KRW and 17.5 trillion KRW. Primary Collateralized Bond Obligations (P-CBO) based on SME corporate bonds increased by 400 billion KRW to 2.6 trillion KRW issued.