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Moon, Kyung Hwa --- "Recent Regulatory Developments Regarding ABS in Korea" [2012] ELECD 874; in Kim, Hwa-Jin (ed), "Korean Business Law" (Edward Elgar Publishing, 2012)

Book Title: Korean Business Law

Editor(s): Kim, Hwa-Jin

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781003398

Section: Chapter 8

Section Title: Recent Regulatory Developments Regarding ABS in Korea

Author(s): Moon, Kyung Hwa

Number of pages: 25

Extract:

8. Recent regulatory developments
regarding ABS in Korea
Kyung Hwa Moon

I. INTRODUCTION

Korea enacted the Asset-Backed Securitization Act (the "ABS Act")
on September 16, 1998 in the wake of the Asian financial crisis that hit
the country in 1997. Even before the enactment of the ABS Act, there
were attempts to securitize assets held by Korean companies, especially
merchant banks and other financial institutions. However, not only were
such attempts frustrated by the financial crisis, but also there proved to be
many legal obstacles that made it practically impossible for securitization
transactions to take place in Korea. The ABS Act was enacted to address
such problems, especially by providing for special methods of perfection,
minimization of insolvency risk, and tax and other benefits.1
Since the enactment of the ABS Act, the securitization market in Korea
has grown rapidly and has become an important source of funding. In
2010, a total of over KRW 28 trillion asset-backed securities were issued.2
In terms of the proportion of asset-backed securities in the direct financing
market in Korea, KRW 11.1 trillion asset-backed securities were publicly
offered in Korea in 2010 out of a total of around KRW 112.9 trillion
corporate bonds issued.3 In the initial stages after the enactment of the
ABS Act, the securitized assets were mostly non-performing loans held by
financial institutions and securitization was used to dispose of such non-


1 For a detailed background on the enactment of the ...