K Car Capital Issues 80 Billion KRW ABS Backed by Pure Used Car Installment Receivables

Significant Reduction in Credit Provision and Guarantees

K Car Capital issued asset-backed securities (ABS) worth 80 billion KRW backed by automobile installment receivables.

On the 13th, K Car Capital, a used car specialized financial company, announced that it would issue ABS worth 80 billion KRW secured by 100.2 billion KRW of automobile installment finance assets.

Unlike existing specialized credit finance companies, this ABS is issued solely with 100% pure used car installment receivables from K Car, structured by maturity into 65 billion KRW of senior securities from 6 to 42 months and 15 billion KRW of mezzanine securities from 45 to 48 months. The lead underwriter is KB Securities.

NH Nonghyup Bank provided a credit facility of up to 10 billion KRW for the 65 billion KRW senior securitized bonds. Seoul Guarantee Insurance provided guarantees for 8 billion KRW of the mezzanine securitized bonds. The scale of credit facilities and guarantees has been significantly reduced. When the third ABS worth 70 billion KRW was issued in February last year, full credit facilities and guarantees were provided by NH Nonghyup Bank, Industrial Bank of Korea, and Seoul Guarantee Insurance.

In May last year, K Car Capital successfully obtained an investment grade BBB (stable) rating from Korea Credit Rating and Korea Ratings. Accordingly, 73 billion KRW of this ABS will be issued with the highest bond rating of AAA, and 7 billion KRW will be issued with an A rating.

Liquidity is also steadily secured. As of the end of September last year, K Car Capital's cash and deposits amounted to 68.5 billion KRW, about seven times the 9.4 billion KRW at the end of 2022. A K Car Capital official said, "Through this ABS issuance, it has become possible to raise large-scale funds at low interest rates, enabling us to accelerate our business operations," adding, "Based on the high trust of K Car, the largest direct used car platform company in Korea, and K Car Capital, we will strive to provide customers with continuous and stable installment finance services."