Relief Loans MBSs put up for the final round of bidding are sold out
- Date 2015-07-03
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Relief Loans MBSs put up for the final round of bidding are sold out
- The average sell-through rate of the eight rounds of bidding reaches 87%-
1. The results of the 8th round of Relief Loans MBS bidding
Korea Housing Finance Corporation (HF, CEO Kim Jae-Chun) announced on the 3rd that 960 billion won of MBSs
with a maturity of 10 years or more were put up for auction that day and all were sold. As the bids made by
investors amounted to 2.18 trillion won (bid-to-cover ratio at 2.3), the knock-down interest rates for MBSs with
maturities of 10, 15, and 20 years were set at 1 basis point, 3 basis points, and 9 basis points lower than
the ceiling rate, respectively.
In particular, the sell-through rate has hovered over 90% since the 5th round of bidding, indicating the strong
continued demand for the MBSs.
2. The results of Relief Loans MBS issuances
HF has issued a total of 30.8 trillion won worth of MBSs secured by its Relief Loans through eight issuances.
In total, 22 trillion won of short-term MBSs with maturities of 1 year to 7 years have been sold off to the banks
offering Relief Loans. In addition, 8.8 trillion won worth of MBSs with maturities of 10 to 20 years were put up
for competitive bidding. Of these, 7.7 trillion won of the long-term MBSs were sold off to general investors,
and the remaining 1.1 trillion were sold to the loan-offering banks. An HF official said of the bidding, “There was
concern that the temporary supply of long-term securities in such a huge volume would strain the supply
and demand balance. However, the average sell-through rate reached 86.8%, clearly signaling that these
securities were channeled smoothly into the market.”
3. Expected benefits
An HF official said of this MBS bidding, “The supply of long-term MBSs will contribute to revitalizing the nation's
long-term bond market. Of all MBSs issued, 28.5% were those with maturities of 10 years or more, offering a new
long-term, non-treasury investment option to investors.”He also added, “This bidding has served as an opportunity
to broaden MBS investments by exploring various demands beyond those of pension funds, insurers, and other
large-scale institutional investors that favor long-term investments.”