Korea Tackles Property Risk With Loan Conversions for Brokerages
- Brokerages’ exposure to PF-ABCP totaled $15.8 billion in March
- Maturity mismatch means firms at risk of surge in funding cost
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South Korea wants brokerages to swap short-term risky property debt for longer term borrowings, in bid to counter risks in the real estate market and avoid a repeat of last year’s turmoil.
The country’s financial regulator unveiled what it termed preemptive steps to counter a rise in loan delinquencies and address maturity mismatch between the long-running real estate projects and the short-term debt to finance them.