1Q ABS Issuance Amount Up 38% Year-on-Year

Financial Supervisory Service Announces Q1 Registered ABS Issuance Performance
Increase in Card Bonds, Installment Finance Bonds, and NPL-Backed ABS
Notable Growth in Credit Finance Companies Among Financial Firms

Financial Supervisory Service, Yeouido, Seoul. Photo by Younghan Heo younghan@

The issuance volume of registered Asset-Backed Securities (ABS) in the first quarter of this year increased by 38% compared to the same period last year. This was due to a significant rise in ABS issuances backed by credit card receivables, installment finance receivables, and Non-Performing Loans (NPLs). Issuance of bond collateralized securities (P-CBO) backed by corporate bonds also increased.

The Financial Supervisory Service announced on the 29th that the registered ABS issuance amount in the first quarter of 2024 reached 14.9 trillion KRW, an increase of 4.1 trillion KRW (38.1%) compared to the same period last year, driven by a significant rise in ABS issuance by credit card companies and others.

Loan receivables include Mortgage-Backed Securities (MBS), Non-Performing Loans (NPL), and Real Estate Project Financing (PF), while trade receivables include credit card receivables, installment finance receivables, and corporate trade receivables.

NPL-Backed ABS Issuance Up 113.5%

Looking at ABS backed by loan receivables, the issuance volume increased by 439.7 billion KRW (5.6%) year-on-year to 8.2255 trillion KRW. Among these, NPL-backed ABS issuance recorded 1.61 trillion KRW, up 113.5% compared to the previous year. MBS issuance decreased to 5.8828 trillion KRW due to reduced securitization demand for policy mortgage loans. Real estate PF-backed ABS, which did not exist in the first quarter of 2023, newly emerged in the first quarter of 2024, reaching 646 billion KRW in scale.

The increase in NPL-backed ABS issuance is attributed to rising delinquency rates in the financial sector. The delinquency rate trend for domestic banks steadily rose from 0.25% (December 2022) → 0.33% (March 2023) → 0.35% (June 2023) → 0.38% (December 2023) → 0.51% (February 2024).

Real estate PF-backed ABS were newly issued in the first quarter of this year. Securitization related to public-supported private rental housing and multi-family housing development projects led to the issuance of real estate PF-backed ABS, which was nonexistent in the same period last year. Real estate PF-backed ABS were also not issued in the fourth quarter of 2022.

Card Receivables-Backed ABS Up 816.5% to 3.1 Trillion KRW

ABS backed by trade receivables increased by 3.4358 trillion KRW (163.1%) year-on-year to 5.5418 trillion KRW. Card receivables-backed ABS surged by 816.5%, reaching 3.1 trillion KRW. Installment finance receivables-backed ABS also rose by 88.1%, surpassing 1 trillion KRW.

The sharp increase in card receivables-backed ABS issuance is due to the rise in matured card bonds. The quarterly maturity scale of card bonds was 6.01 trillion KRW in the first quarter of 2024, up from 4.7 trillion KRW in the first quarter of 2023. This led to increased ABS issuance as an alternative funding method.

Financial Institutions’ Issuance Up 174.9%... Specialized Credit Finance Companies Up 378.8%

By asset holders, the issuance volume of ABS by Korea Housing Finance Corporation decreased by 16.3% year-on-year, while issuance by financial companies and general corporations increased by 174.9% and 70.1%, respectively. Notably, specialized credit finance companies saw a 378.8% increase.

For financial companies, the surge in ABS issuance backed by card receivables and installment finance receivables by specialized credit finance companies, along with the expansion of NPL-backed ABS issuance by banks, contributed to the increase. General corporations increased issuance due to the expansion of real estate PF-backed ABS related to public-supported private rental projects.

Meanwhile, the total outstanding balance of registered ABS as of the end of March 2024 was 258.4 trillion KRW, up 27.6 trillion KRW (12.0%) from 230.8 trillion KRW in the same period last year. This is based on the maturity dates recorded in the securitization plans, and MBS data is based on Korea Housing Finance Corporation statistics.