Jugeumgong Issues First 'Straight MBS' Without Early Repayment Since Establishment

Comparison of issuance rates between the most recent general MBS and straight MBS. Photo by Korea Housing Finance Corporation

[Asia Economy Reporter Song Seung-seop] Korea Housing Finance Corporation announced on the 17th that it will issue 'Straight MBS' for the first time since its establishment.

Straight MBS is a product composed entirely of securities with a bullet repayment condition at maturity without a call option (the right to repay the principal to investors before maturity). MBS are securities securitized from mortgage loan receivables. Previously, some of the MBS issued by the corporation included call options for certain maturities (over 5 years).

This Straight MBS consists of four maturities: 1, 2, 3, and 5 years. Despite the rise in government bond yields, the final issuance yield decreased by 0.161 percentage points compared to the MBS issuance yield (2.036%) on the 3rd. The scale is approximately 540 billion KRW.

An official from the Korea Housing Finance Corporation stated, “By shortening the issuance maturities according to investor demand and reducing the uncertainty of call options, it was possible to lower the funding cost,” and emphasized, “We will continue to expand investors through diversification of issuance structures.”