FSS Begins Assessing Risks of Asset-Backed Securities Sales for Legoland

[Asia Economy Reporter Lee Jung-yoon] It has been confirmed on the 6th that the Financial Supervisory Service (FSS) has begun identifying risks related to the Gangwon-do Legoland real estate project financing (PF) asset-backed securities (ABS).

According to financial authorities on the 6th, securities firms recently reported to the FSS the current status of risk exposure related to ABS worth 205 billion KRW, which became problematic due to Gangwon-do's failure to fulfill its debt guarantee promise.

Earlier, the Jungdo Development Corporation (GJC) established a special purpose company (SPC) named Iwon Jeilcha in 2020 to raise funds for the construction of Legoland and issued ABS worth 205 billion KRW.

The volume was guaranteed by Gangwon-do, and BNK Investment & Securities, which acted as the lead manager, fully underwrote the securities and sold them to major domestic securities firms in the market. There are concerns that these securities may have flowed into individual customer accounts, and some suspicions have arisen that a portion was directly retailed to individual investors. If Gangwon-do proceeds with rehabilitation procedures for GJC as currently planned, investor losses appear inevitable.