Lotte Card has issued its first asset-backed commercial paper (ABCP) utilizing automobile installment financing bonds. This move aims to secure liquidity and diversify its funding structure by leveraging automotive financial assets.
On October 20, Lotte Card announced the issuance of a domestic ABCP worth 167 billion won, backed by automobile installment financing bonds.
ABCP is a type of commercial paper issued by a special purpose company (SPC) that is secured by specific assets held by a corporation or financial institution. This marks the first time Lotte Card has raised funds by securitizing automobile installment financing bonds.
The privately placed ABCP will operate on a rollover basis, gradually reducing the outstanding balance each month over a total period of 42 months.
Lotte Card has entered into agreements with NH Nonghyup Bank, IBK Industrial Bank, and Woori Bank for ABCP purchase guarantees and credit extensions. Based on these agreements, it received A1(sf) credit ratings from Korea Credit Rating and NICE Investors Service.
Lotte Card operates its automobile installment financing business primarily through products like 'Lotte Card Direct Auto,' which combines credit card payments with installment financing. As of the first half of this year, Lotte Card's automobile installment financing assets amounted to 1.3564 trillion won, a 16.1% increase from 1.1678 trillion won during the same period last year.
A Lotte Card official stated, "Thanks to the growth of our automobile installment financing assets, we have successfully achieved our first securitized funding based on related bonds. We plan to continue diversifying our funding sources to secure stable liquidity."
* This article has been translated by AI.
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