According to the Korea Securities Depository on the 10th, the total amount of corporate bonds (public and private) issued by five NPL specialized investment firms, including Union Asset Management, Daishin F&I, Hana F&I, Kiwoom F&I, and Woori Financial F&I, has reached 2.863 trillion won this year.
NPL specialized investment firms buy distressed loans and guarantees related to real estate from financial institutions at low prices, restructure them, and then sell them at higher prices to generate profits.
This year has been busy for securing funds to purchase non-performing loans. Each time NPL specialized investment firms conducted demand forecasts for public bond issuance, funds exceeding ten times the target amount were attracted, indicating strong investor interest. Kiwoom F&I and Woori Financial F&I also raised 50 billion won and 120 billion won, respectively, through capital increases.
NICE Credit Rating Agency stated, "As the scale of the non-performing loan public bidding market expands, NPL specialized investment firms have increased their investment assets through capital increases and debt issuance," and analyzed, "Considering the lagging nature of non-performing loan resolution, the growth of the NPL market will continue until 2025."
The non-performing loan market has been continuously expanding since last year. During the COVID-19 pandemic, the government implemented measures to defer the classification of credit soundness, resulting in favorable asset soundness indicators for banks. However, since last year, due to high-interest rates and the end of financial support policies, corporate credit has rapidly deteriorated.
According to the Financial Supervisory Service, the balance of non-performing loans at domestic banks was recorded at 14.5 trillion won at the end of September. This balance was 10.1 trillion won at the end of 2022 and surged to 12.5 trillion won at the end of last year. The upward trend has continued this year as well.
Despite active sales of non-performing loans, the balance has increased as the amount of newly generated non-performing loans has outpaced the sales. The scale of non-performing loan sales by domestic banks reached 5.3 trillion won by the third quarter of this year, already surpassing last year's total sales of 4.7 trillion won.
NICE Credit Rating Agency upgraded the credit ratings of Hana F&I and Woori Financial F&I by one notch each on the 6th, confirming their long-term credit ratings at A+ and A, respectively.
Both firms have increased their market share and maintained stability since last year. The NPL investment assets of Hana F&I increased from 969.4 billion won at the end of 2022 to 2.171 trillion won in the third quarter of this year.
Woori Financial F&I, established in January 2022, quickly expanded its operating assets by taking over the NPL division from Woori Comprehensive Financial. The total asset size surged from approximately 340 billion won at the end of 2022 to about 1.4 trillion won as of September.
[Reporter: Myeong Ji-ye]
