ABS issuance up 35.5 pct in H1

SEOUL, July 18 (Yonhap) -- The issuance of asset-backed securities (ABSs) in South Korea soared 35.5 percent in the first half of this year, as the state-run mortgage agency jacked up its sale of the financial instrument, the financial regulator said Thursday.

Mortgage agencies and local financial and non-financial companies floated a total of 26.8 trillion won (US$23.9 billion) worth of ABSs in the January-June period, compared with 19.8 trillion won a year earlier, according to the Financial Supervisory Service (FSS).

The on-year increase came as the Korea Housing Finance Corp. (KHFC), the state-run mortgage agency, saw its ABS issuance more than double to 14.8 trillion won over the cited period, the FSS said.

The amount of ABS issuance by the KHFC in the first half accounted for 55.4 percent of the total, it added.

The KHFC has been selling long-term fixed-rate mortgages funded by the government as part of a policy effort to support the financially weak. Such home loans become underlying assets for the KHFC to make mortgage-backed securities (MBSs), a type of an ABS, to be sold to investors.

In the last six months, the mortgage agency floated 14.2 trillion won worth of MBSs, up 8.3 trillion won from the previous year.

But ABS issuances by companies declined to 4.2 trillion won from 4.9 trillion won in the same period, as demand for ABSs in project financing shrank due to the slowdown in the property sector.

The corresponding figure for credit financing firms such as credit card companies reached 4.1 trillion won in the first half, down 2.3 percent from a year ago, the FSS said.

Financial companies and mortgage lenders use cash flows from mortgages, loan obligations and credit card debts as underlying assets to issue ABSs.

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