Kookmin Bank, the second biggest commercial lender in South Korea, has said it plans to sell W512 billion ($436 million) of securities backed by non-performing loans (NPL) in the domestic market before year-end. If the transaction goes as planned, Kookmin will become the first bank in Korea to issue an NPL-backed deal and could pave the way for similar issues from other banks burdened with bad debt.
The transaction is being arranged by domestic houses Daishin Securities and Samsung Securities. A line of credit, a typical feature in Korean domestic securitizations, will likely be provided by Housing & Commercial Bank to the tune of W150 billion. Launch date is set for the end of November, said a Samsung banker. Domestic asset backeds in Korea have a relatively short execution, since they typically have recourse back to the originator and are subject to less rigorous historical analysis than true securitization deals.