The nation’s second-largest retailer entered court receivership on March 4, sending shockwaves through financial markets, where approximately 600 billion won (US$411.5 million) in debt securities are held primarily by individual and corporate investors.
Industry officials said financial firms convened their first joint meeting on Monday to address the crisis, with representatives from around 20 securities firms and asset managers in attendance. The discussion centered on asset-backed short-term bonds (ABSTBs) tied to Homeplus' credit card receivables — a financial instrument that straddles the line between commercial and financial debt.
Homeplus has stated it will defer repayment of financial obligations while continuing to honor commercial debts, leaving investors grappling with the classification of these securities — a determination that could have profound implications for their investments.
Securities firms are bracing for potential mis-selling allegations if the bonds are deemed financial debt, which could translate into significant losses for retail investors lured by their higher interest rates.
Meanwhile, Shinyoung Securities, one of the underwriters of Homeplus' debt and a participant in the joint meeting, is weighing legal action against MBK Partners, the private equity firm that controls the retailer. The firm suspects MBK Partners may have continued issuing bonds despite foreseeing a credit rating downgrade, a move that could constitute fraud under South Korean law.
"Many market participants share these suspicions, and some institutions are calling for strong countermeasures, including criminal complaints," a Shinyoung Securities official said. While the firm is exploring legal options, it has also signaled a willingness to engage in dialogue first.
In a notable escalation, Homeplus' promissory notes were declared dishonored by Standard Chartered Bank Korea on Monday, prompting the suspension of the retailer’s checking account transactions. Shinhan Bank is reportedly preparing to take similar action.
Retail investors affected by the crisis have mobilized, forming an emergency committee that plans to stage a protest outside the Financial Supervisory Service on Wednesday. Their primary demand is for their investments to be classified as commercial rather than financial debt, which would afford them greater protection.
Despite the turmoil, some market observers caution against overreaction, noting that even funds with minimal exposure to Homeplus debt have been pulled from sale at major securities firms, including KB Securities and NH Investment & Securities.
reporter
Kim Dong-young
davekim0807@ajupress.com
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