ABS Issuance Drops 39% in Q3... Impact of Special BoGeumjari Loan Termination

The Financial Supervisory Service announced on the 30th that the issuance amount of asset-backed securities (ABS) in the third quarter was 10.7 trillion won, a decrease of 6.9 trillion won (39.3%) compared to the same period last year.

With the end of the special Bogeumjari Loan, the issuance of mortgage-backed securities (MBS) by Korea Housing Finance Corporation, which uses mortgage loans as underlying assets, sharply declined by 67.6%, leading to a reduction in the overall ABS issuance volume. The issuance amount of ABS issued by general corporations also decreased by 23.8% compared to the same period last year, totaling 1.113 trillion won.

On the other hand, the issuance volume of ABS issued by financial companies increased by 43.6% to 5.6171 trillion won. This was due to the expansion of ABS issuance based on installment finance receivables by specialized credit finance companies (specialized credit finance companies) and non-performing loan (NPL) based ABS by banks. The Financial Supervisory Service explained that efforts to secure asset soundness through the sale of non-performing loans by banks and others led to a 71.6% increase in NPL-based ABS issuance compared to the same period last year.

With the revision of the Enforcement Decree and supervisory regulations of the Specialized Credit Finance Business Act, the funding methods for specialized credit finance companies have expanded, resulting in the first issuance of rental receivables-based ABS by specialized credit finance companies, amounting to 40 billion won.

Meanwhile, the total outstanding balance of registered ABS as of the end of September was 258.8 trillion won, an increase of 12.8 trillion won (5.2%) compared to the end of the same period last year (246 trillion won).