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Jun 17, 2021 (Gmt+09:00)
South Korean institutional investors, including the Public Officials Benefit Association (POBA) and Yellow Umbrella Mutual Aid Fund, emerged as the largest group of liquidity providers under the US Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF) program introduced in 2020.
To utilize the funding facility, New York-based EMP Belstar had raised $580 million from nine Korean institutions last year, based on which it borrowed $2.6 billion from the Fed to buy US asset-backed securities (ABS), according to the US investment firm on June 17.
The borrowing represented 56% of the $4.5 billion TALF program that recently closed, outstripping other TALF-related borrowings by global money managers like BlackRock and Barings by a big margin, data from the US Federal Reserve shows.
The TALF program was introduced by the US Treasury and the Federal Reserve Bank in both 2009 and 2020 to support lending to consumers and small business through ABS issuance.
Through TALF, the Fed lent money equivalent to about five to 20 times the principal raised by a fund at an ultra-low rate of 1%. Then the fund house used the loans to purchase AAA-rated and government-backed securities, which carry higher credit ratings than the US Treasuries rated AA+.
Back in 2009, EMP Belstar raised approximately $300 million, equaling four percent of the total $77 billion raised for the TALF program. It was among one of the top 10 TALF borrowers in 2009, while its 2009 TALF fund returned 20% per year on average.
Under the latest TALF program, BlackRock borrowed $113.5 million, accounting for only 2.6% of the total, followed by Barings' $109.6 million at 2.5%.
EMP Besltar was founded in 2008 by Korean-American Chairman Daniel Yun and Joonho Lee. It arranges South Korean institutions' investment in the US credit market.
In South Korea, it established Korea Superfreeze in 2015, and attracted Goldman Sachs PIA and SK Inc. as major shareholders of the cold storage company.
Write to Chae-yeon Kim and Chang Jae Yoo at why29@hankyung.com
Yeonhee Kim edited this article.
Jun 05, 2020 (Gmt+09:00)
Jul 07, 2020 (Gmt+09:00)