The Korea Housing Finance Corp., a government-related nonbank financial institution in South Korea, has issued a rated $500 million cross-border
Moody’s has assigned its definitive long-term rating of Aa1 to the 1.625% bonds due 2018, which constitute direct, unconditional and unsubordinated general obligations of KHFC. The bonds have a priority claim on a dynamic pool of mortgages secured by residential real estate in Korea.
The rating is based on the standard covered bond recourse to the issuer and the collateral pool, the Aa3 rating of the issuer, the commitment by the issuer to main an asset percentage equal to over-collateralization of about 20%, and the structure of the deal.
The mortgages in the cover pool are long-term fixed rate loans, have weighted average seasoning of 1.6 months and remaining term of 229.6 months. The weighted average current loan to original property value is 53.8% before adjustments in Moody’s analysis. After adjusting the loan to value ratio for small tenant claims and adding them to the total loan about the original LTV increases by about 6%.
While the bonds are denominated in U.S. dollars the loans are denominated in Korean won.
