As demand for the Housing Finance Corporation’s (HFC) home mortgage loans persists, Mortgage-Backed Securities (MBS), issued using residential mortgage repayments as collateral, have increased year-on-year for three consecutive quarters. However, Asset-Backed Securities (ABS) based on loan receivables, such as real estate project financing, declined, causing the total ABS issuance volume to decrease.
According to the Financial Supervisory Service on the 29th, third-quarter ABS issuance amounted to 12.5 trillion won, a 5.7% decrease from the same period last year.
By underlying asset category, while MBS issuance increased for loan receivables, ABS issuance based on real estate project financing and non-performing loans (NPLs) decreased, resulting in a drop of 700 billion won (8.8%) compared to the previous year.
MBS issuance has risen for three consecutive quarters year-on-year. Quarterly MBS issuance figures were as follows: △Q1 this year: 5.1 trillion won (+2.5 trillion won year-on-year) △Q2: 6.6 trillion won (+3.9 trillion won) △Q3: 5.8 trillion won (+700 billion won). The cumulative issuance amount for the first three quarters of this year reached 17.5 trillion won, a 66% increase from the same period last year (10.5 trillion won). However, in the third quarter, issuance increased by only 700 billion won compared to the previous year, indicating a slowdown in growth relative to the first and second quarters.
ABS based on real estate project financing saw its issuance volume decrease by 1.18 trillion won year-on-year, largely due to base effects following expanded ABS issuance leveraging guarantees from the Housing and Urban Guarantee Corporation (HUG) last year.
For accounts receivable, while ABS issuance based on installment finance receivables decreased, issuance based on credit card receivables increased, causing total issuance volume to rise by 400 billion won (9.9%) compared to last year. The issuance volume of Primary Collateralized Bond Obligations (P-CBOs) based on corporate bonds decreased by 394.8 billion won (31.5%). P-CBOs are asset-backed securities based on newly issued corporate bonds by small and medium-sized enterprises (SMEs).
By asset holder, for financial institution ABS, while issuance by specialized credit finance companies increased, issuance by banks and securities firms decreased, keeping the total issuance volume at a level similar to last year. The issuance volume of general corporate ABS declined by over 50% as issuance of ABS based on real estate project financing decreased.
Meanwhile, the cumulative outstanding balance of registered ABS this year reached 39.1 trillion won, a 14% increase from the previous year.
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