S. Korea's ABS issuance jumps 71.1 pct in Q1

SEOUL, April 21(Yonhap) -- Sales of asset-backed securities (ABS) in South Korea surged 71.1 percent on-year in the first quarter as banks securitized more non-performing loans, the financial watchdog said Tuesday.

ABS issuance stood at 7.79 trillion won (US$5.75 billion) in the January-March
period, compared with 4.55 trillion won a year earlier, 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.
"In the first quarter, securities backed by banks' non-performing loans sharply
increased as rising default rates jacked up bad debts," the FSS said. "The sale
of primary collateralized bond obligations also increased in a bid to ease cash
strains faced by smaller firms."
According to the watchdog, local banks floated 876.8 billion won in
non-performing loan-backed securities last quarter, up 207.6 percent from the
previous year.
"The issuance of bad loan-backed securities is likely to climb down the road as
the slowing economy is raising the loan delinquency rate and local banks will
likely clear a large amount of bad debts through an envisioned bad bank," the FSS
said in a statement.