Multi-Asset MMF 1 Trillion 'Leak'

Multi-Asset MMF Original Settings
5.188% Withdrawn by End of September Evacuation
Concerns Over Legoland Aftermath

It has been confirmed that a 'fund run' worth approximately 1 trillion won occurred in the money market fund (MMF) of Multi-Asset Asset Management, which had invested in Legoland asset-backed commercial paper (ABCP). It is analyzed that a large amount of funds withdrew due to concerns over the impact on Multi-Asset following the default declaration by Gangwon Province.

According to the Korea Financial Investment Association on the 3rd, the principal amount of Multi-Asset's MMF on the 1st was 1.0561 trillion won, a withdrawal of 51.88% compared to 2.1948 trillion won on September 30. This was the largest outflow among all MMFs.

Multi-Asset's MMF funds sharply decreased after the 7th of last month. With 956 billion won withdrawn at once, the fund size dropped to the 1 trillion won level. Most of the funds were institutional. An industry insider analyzed, "Seasonally, MMF funds may decrease due to increased corporate funding demand, but it is unusual for nearly half of the total assets to withdraw at once."

Aftermath of Legoland

What the industry focused on was the aftermath of Legoland. According to data submitted by the Financial Supervisory Service to Yang Jeong-sook, a member of the National Assembly's Political Affairs Committee, Multi-Asset was the only asset management company that purchased Legoland ABCP. Out of a total of 205 billion won, about 10 billion won was purchased. Since the purchased ABCP was incorporated into Multi-Asset's MMF, the industry consensus is that funds fearing the impact of Legoland massively withdrew.

The timing of the large-scale fund outflow coincided with the period when the credit rating of ABCP dropped to a D rating due to the Legoland incident. On September 29, the special purpose company (SPC) 'I-One First' created by Gangwon Jungdo Development Corporation for loans failed to repay the 205 billion won loan received for the Legoland development project. On the 30th of the same month, Korea Credit Rating and Seoul Credit Rating downgraded I-One First's ABCP credit rating from 'A1' to 'C'. Subsequently, on the 4th of last month, after the final default processing, Korea Credit Rating, Seoul Credit Rating, and SCR Seoul Credit Rating all lowered the rating to D. The C rating is assigned when timely repayment ability is doubtful and speculative elements are strong, while the D rating is the lowest rating given when the debt is currently in default.

Fearful Withdrawal

The funds mainly withdrew from the 'Government and Public Bond Corporate MMF1'. Over 1 trillion won was withdrawn. As concerns about fund stagnation and tightening grew, it appears that frightened institutions withdrew funds from the areas they judged to be the riskiest. An industry insider said, "From an institutional perspective, it is natural to withdraw funds from areas with high risk of tightening, given the awareness of the Legoland incident."

However, it was found that there was no significant fund outflow from the product 'New Corporate MMF', which actually held Legoland ABCP. According to FN Spectrum, about 50.3 billion won was withdrawn from this MMF over the one-month period from September 30 to the 28th of last month. The industry analyzed that this MMF might not have reflected the default of ABCP because it calculates the base price based on book value.

An industry official stated, "Since there is no change in the MMF price and only large-scale assets are introduced in the management report, it seems difficult for investors to judge that their invested product is affected by the Legoland aftermath."

Regarding this situation, Multi-Asset explained, "Since there was little fund inflow in the first half of this year, the large scale of fund outflow in the second half only appears significant and is unrelated to the Legoland incident."

Meanwhile, Multi-Asset Asset Management was an asset management company under Daewoo Securities, but after Mirae Asset Group acquired Daewoo Securities, it was incorporated as a subsidiary of Mirae Asset Group.