South Korea’s ABS Issuance Declines Sharply in 2025 First Half
(MENAFN) South Korea’s issuance of asset-backed securities (ABS) plunged sharply in the first half of the year, dragged down by a steep decline in demand for mortgage-backed securities (MBS), according to data released Thursday by the Financial Supervisory Service.
Total ABS issuance for January through June dropped 23.6% year-on-year to 21.01 trillion won (approximately 15.2 billion U.S. dollars).
This significant contraction follows the government’s termination of a special mortgage loan program in January last year, which triggered a substantial slump in MBS sales.
ABS sales, supported by various loans including mortgage, non-performing loans, and real estate project financing (PF), fell 21.5% year-on-year to 12.7 trillion won during the same period.
The issuance of MBS, issued by the state-owned Korea Housing Finance Corp. to securitize mortgage loans, nosedived 52.9% to 5.37 trillion won.
Meanwhile, ABS backed by accounts receivable—such as credit card and installment sales receivables—dropped 40.2% to 5.06 trillion won. However, primary collateralized bond obligations (P-CBOs) linked to corporate bonds rose 13.9% to 3.25 trillion won.
Sales of ABS by financial firms declined 24.5% in the first half compared to last year, whereas issuance from non-financial companies surged 67.5%.
The Bank of Korea reduced its benchmark interest rate by 25 basis points twice this year—in February and May—bringing it down to 2.50%, following two similar cuts in October and November last year.
Outstanding ABS issuance stood at 243.1 trillion won as of June-end, reflecting a 5.5% decrease from the previous year. (1 won equals 0.00072 U.S. dollar)
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