With the End of Special BoGeumjari Loan... ABS Issuance Fell 21.8% Last Year

Last year, the issuance volume of asset-backed securities (ABS) decreased by more than 20% compared to the previous year. This was due to the termination of the special Bogeumjari Loan by the Korea Housing Finance Corporation, which caused the issuance volume of mortgage-backed securities (MBS) to nearly halve.

The Financial Supervisory Service announced on the 31st that the registered ABS issuance amount in 2024 was 51.7 trillion won, a decrease of 14.4 trillion won (21.8%) compared to the previous year. ABS refers to securities issued using illiquid assets such as real estate, accounts receivable, and mortgage-backed bonds as collateral.

The shrinkage in the annual registered ABS issuance amount is analyzed to be due to the termination of the previously highly popular special Bogeumjari Loan in January last year and the slowdown in the housing market. The issuance volume of MBS based on the special Bogeumjari Loan reached 37 trillion won in 2023 but sharply dropped to about 18.9 trillion won last year. MBS, a type of ABS, are securities issued based on mortgage-backed bonds, which are long-term loans secured by housing provided by financial institutions.

By asset holders, the issuance volume of ABS by the Korea Housing Finance Corporation and general companies decreased by 48.8% and 5.7%, respectively, compared to the previous year, while the issuance volume by financial companies increased by 20.0% due to the expansion of ABS issuance based on non-performing loans (NPL). By securitized assets, ABS issuance based on loan receivables such as mortgage-backed bonds and NPL decreased by 35% compared to the previous year, while ABS issuance based on accounts receivable, including credit card receivables and installment finance receivables, increased by 7.7%.

Among loan receivables, the issuance volume of ABS based on NPL increased from 5.5 trillion won in 2023 to 8 trillion won in 2024. This is analyzed as a result of efforts to secure asset soundness through the sale of non-performing loans by banks and others. Following the amendment of the Asset Securitization Act implemented from early last year, ABS based on NPL from Saemaeul Geumgo and credit union unit cooperatives were also issued for the first time.

In addition, the total outstanding balance of registered ABS was recorded at 257.6 trillion won as of the end of last year. This is an increase of 4.2 trillion won compared to the end of the previous year.