PF ABCPs issued with shorter maturity on rise amid weak property market

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The maturity of real estate project financing asset-backed commercial papers (PF ABCPs) backed by securities and construction firms has shortened, suggesting that investor sentiment continues to remain weak despite the government’s stabilization measures amid the depressed property market.

According to Yuanta Securities and financial research company Yonhap Infomax on Monday, 60.2 percent of the outstanding balance of PF ABCPs backed by brokerage houses was short-term notes with less than one month until maturity as of end of January.

The short-term bonds accounted for 48.3 percent of the entire ABCPs at the end of December 2021 before surging to 57.1 percent at the end of October last year after the Legoland Korea crisis.

The share of PF ABCPs with a maturity of more than four months was 1.9 percent at the end of January, down from 5.2 percent in December 2021.

PF ABCPs backed by construction firms with less than one month maturity accounted for 31.3 percent of the outstanding balance, up from 26 percent at the end of December 2021. Those with a maturity of more than four months, on the other hand, fell to 22.9 percent from 36.1 percent over the same period.

“The trend suggests that the maturity of newly issued PF ABCPs has shortened,” said Koon Moon-joo, an analyst at Yuanta Securities.

A shorter maturity means that investors believe there is growing uncertainty in the real estate market mainly led by a sharp rise in the number of unsold new apartments across the country amid the weak property market.