The Korea Credit Guarantee Fund has successfully issued asset-backed securities using a self-trust method for the first time since the legal amendment. This change in issuance structure is expected to lower funding costs for companies while fully activating the direct issuance system.
On July 1, the Credit Guarantee Fund announced it had successfully issued 269 billion won in asset-backed securities. This issuance marks the first instance of asset-backed securities being issued through the self-trust method since the amendment of the Credit Guarantee Fund Act in April of last year, as well as the Fund's first direct securities issuance.
In July of last year, the Fund established a dedicated task force to focus on building the direct issuance system for asset-backed securities. Over the past year, the task force has diligently worked on designing the issuance process, developing the IT system, coordinating with relevant agencies, and improving regulations.
The asset-backed securities are classified as special bonds, resulting in significantly lower funding rates compared to the existing special purpose company (SPC) method. With reduced issuance rates and fees, participating companies are expected to benefit from an average financial cost reduction of 111 basis points over three years.
Market reactions have been positive. Prior to the demand forecast, the Fund held investment briefings for major institutional investors over approximately three weeks, securing investment demand exceeding the targeted 260 billion won.
The Fund plans to conduct two additional issuances in the second half of the year to alleviate the financial burden on companies facing funding difficulties.
A Fund official stated, "This issuance demonstrates our capability to independently manage the entire process of securities issuance. We will continue to expand direct issuance to enable more companies to secure funding at lower costs."
* This article has been translated by AI.
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