S. Korea's ABS issuance soars 74.6 pct in 2009

SEOUL, Feb. 8 (Yonhap) -- Sales of asset-backed securities (ABS) in South Korea
jumped 74.6 percent in 2009 from a year earlier as the issuance of
mortgage-backed securities rose and banks securitized more problem loans, the
national financial watchdog said Monday.

ABS issuance stood at 35.97 trillion won (US$30.7 billion) last year, compared
with 20.6 trillion won the previous year, according to the Financial Supervisory
Service (FSS).
Asset-backed securities are derived from underlying assets such as car loans,
home equity loans, credit card receivables and student loans.
"Last year, local banks securitized more non-performing loans to clean up bad
debt and the issuance of primary collateralized bond obligations, backed by
state-run credit guarantee agencies, also increased in a bid to ease cash strains
faced by smaller firms," the FSS said in a statement.
The watchdog added that the sale of mortgage-backed securities climbed as the
state-run Korea Housing Finance Corp. extended more mortgage loans.
Korea Housing Finance provides long-term mortgages with a maturity of 10 years or
more and issues securities based on such lending. The sale of mortgage-backed
securities rose 69 percent on-year to 9.4 trillion won.
Local financial firms including banks securitized 4.74 trillion won worth of
non-performing loans in 2009, up 261.4 percent from the previous year.
Non-performing loans at 18 local banks reached 15.7 trillion won, or 1.22 percent
of their total lending, at the end of December, according to the watchdog. Last
year, they disposed of bad debts worth 29.7 trillion won through various measures
such as write-offs and asset sales.
sooyeon@yna.co.kr
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