Asset-Backed Securities Reach Record ⁢High in 2013

According to the Financial Supervisory Service, the total amount ⁢of asset-backed securities (ABS) issued in 2013 reached 51.3 trillion won, the highest ever recorded.

This represents a 7.8% increase (KRW 3.8​ trillion) compared to the previous year. ABS has been issued since 1999, ⁢providing a ​vital source ‌of funding for various industries.

Breakdown of ABS Issuance by Sector

Financial ⁤companies, including banks‍ and securities firms, issued ABS worth 19.1 trillion won (37.3% of the total) based on non-performing⁣ loans. This represents a 13.6% increase compared to the previous year.

General companies, such as telecommunications firms, issued KRW 8.3 trillion⁢ (16.2% of the total) based on trade receivables and loan receivables (real estate PF, SOC). However, this represents a 9.9% decrease compared to the previous year.

Public corporations, including the Korea Housing Finance Corporation and SH Corporation, issued ABS worth 23.8 trillion won (46.5% of the total) based on housing mortgages. This represents a 10.8% increase compared to‍ the‌ previous year.

Market Trends and Outlook

Last year’s ABS issuance market was characterized by an increase in MBS issuance by Korea ⁣Housing Finance Corporation, an increase in ⁤ABS issuance by installment/lease companies, an increase in current and future sales receivables ABS issuance, and a decrease in real estate PF ABS issuance.

Among asset holders, Korea Housing⁤ Finance ⁣Corporation issued the most ABS, with MBS (a⁤ type of ABS) worth 22.7 trillion won being issued.

By securitized assets, MBS ⁣based on mortgage bonds was issued the most, worth 22.7 trillion won.

Regulatory Response

The Financial‍ Supervisory Service believes that changes in ⁤various economic conditions at home‍ and abroad, such as interest rates and the ⁢real economy,⁤ may‍ impact the ABS market due to the implementation⁤ of U.S. tapering (reduction of quantitative easing) ⁣this year.

In response, the Financial Supervisory ⁣Service​ plans to⁣ support the stable ⁢issuance of​ ABS by responding early to significant volatility in the issuance ‍of ABS underlying​ specific securitized assets and comprehensively reviewing the possibility of default assets and ‍the appropriateness of credit reinforcement.