S. Korea`s ABS issuance jumps 66.3 pct in H1

By Kim Soo-yeon
SEOUL, Aug. 6 (Yonhap) -- Sales of asset-backed securities (ABS) in South Korea
jumped 66.3 percent in the first half from a year earlier as banks securitized
more problem loans, the financial watchdog said Thursday.
ABS issuance stood at 18.6 trillion won (US$15.2 billion) in the January-June
period, compared with 11.2 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.
"In the first half, sales of securities backed by banks' non-performing loans
rose sharply as loan delinquency rates increased," the FSS said in a statement.
"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."
Local banks floated 1.33 trillion won in non-performing loan ABS during the first
six months of this year, up 76.8 percent from a year earlier.
As of the end of June, banks' problem loans totaled 19.6 trillion won, or 1.5
percent of total lending, up from 19.3 trillion won three months earlier.
The watchdog said it expected non-performing loan ABS sales to continue to
increase in the second half as state-run debt clearer Korea Asset Management
Corp. (KAMCO) plans to securitize bad debts bought from local banks.
Meanwhile, first-half overseas sales of ABS declined 52.2 percent on-year to 1.67
trillion won in the aftermath of the collapse of Lehman Brothers in September
last year. But the FSS added that such issuances will likely pick up in the
second half as global financial market conditions are improving.
sooyeon@yna.co.kr
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