□ Korea Housing Finance Corporation (HF, CEO Kim Jae-Chun) announced on March 24, 2016, that its four credit
    rating agencies will use the yield-to-call rate to calculate the performance of its mortgage-based securities
    (MBS).
 
□ Up until now, the four agencies of NICE Pricing & Information, Korea Asset Pricing, KIS Pricing, and FN Pricing
    have used different methods of their own in calculating the HF MBS rate of return, including the yield-to-
    maturity (YTM*) or yield-to-call (YTC**) rate.
 
 * Yield to Maturity: The expected rate of return that an investor will receive if he holds a bond all the way until 
   maturity (the same rate of return to be valued the same)
 
** Yield to Call: The rate of return that an investor would earn if he bought a callable bond at its current market
    price and held it until the call date (the same rate of return to be valued differently)
 
□ The different calculation methods used by the credit rating agencies have led to a significant gap in MBS
    performance results, decreasing efficiency in MBS transactions. As a result, HF and the four agencies came to
    an agreement to unify the differing calculation methods into the yield-to-call (YTC) method. In line with this
    agreement, HF established the ‘Guidelines on MBS Valuation’ and distributed it to the agencies in January
    2015, giving them a year's period to prepare for the new method in order to minimize any confusion in the
    market.

□ To raise awareness of the YTC method among market participants, the agencies are going to newly provide
    the projected cash flow of each MBS, which is used in YTC calculation, on its bond information terminal.
 
□ An HF official said, “Our four credit rating agencies have unified their yield calculation methods into YTC. We
    expect that this will contribute to revitalizing MBS transactions.”