S. Korea's asset-backed securities issuance drops in H1

SEOUL, July 31 (Xinhua) -- South Korea's asset-backed securities (ABS) issuance dropped in double digits in the first half due to weaker demand for mortgage-backed securities (MBS), financial watchdog data showed Thursday.

The ABS issuance reached 21.01 trillion won (15.2 billion U.S. dollars) in the January-June period, down 23.6 percent year-on-year, according to the Financial Supervisory Service.

The double-digit shrinkage came after the government ended a special mortgage loan program in January last year, leading to a sharp fall in the MBS sale.

The ABS sale, backed by loans such as mortgage, non-performing loan and real estate project financing (PF), dived 21.5 percent over the year to 12.7 trillion won in the first half.

The issuance of MBS, sold by the state-run Korea Housing Finance Corp. to securitize mortgage loans, plunged 52.9 percent to 5.37 trillion won.

The ABS issuance, backed by accounts receivables including credit card receivables and installment sales receivables, tumbled 40.2 percent to 5.06 trillion won, but the sale of primary collateralized bond obligation (P-CBO) based on corporate bonds advanced 13.9 percent to 3.25 trillion won.

The ABS sale by financial companies decreased 24.5 percent for the first six months of this year from a year earlier, but the issuance by non-financial companies soared 67.5 percent.

The central bank cut its benchmark interest rate by 25 basis points in February and May each to 2.50 percent after lowering it by the same basis points in October and November last year.

Outstanding ABS issuance amounted to 243.1 trillion won at the end of June, down 5.5 percent from a year earlier. (1 won equals 0.00072 U.S. dollar) ■