NPL Investors Face Double Strain as ₩5.4 Trillion in Bonds Mature Over the Next Two Years: Recoveries and Refinancing [fn Market Watch]

[Financial News] South Korean non-performing loan (NPL) investment companies face bond maturities totaling ₩5.4 trillion in 2027–2028. With these maturities coinciding with the period when recovery results are expected to emerge from NPLs bought at high prices in the past, both profitability pressures and funding burdens are expected to increase.
According to a report titled “NPL Investment: How Long Will the Profitability Downturn Continue?” released on the 28th by NICE Investors Service, five major NPL investors in South Korea have ₩2.5 trillion in bonds due in 2027 and ₩2.9 trillion in 2028. These amounts are substantially higher than the ₩1 trillion due in 2025 and ₩2 trillion in 2026.
The analysis covers five specialized NPL investors: United Asset Management Company (UAMCO), Daishin F&I, Hana F&I, Kiwoom F&I, and Woori Financial F&I. The maturity figures are based on bonds issued from January 2021 through the end of September 2026.
The concentration of bond maturities coincides with the period when recovery results from previously acquired NPLs are expected to emerge in earnest. NPL investors sharply increased new investments in 2023–2024, with asset growth rates reaching 128.2% and 50.5%, respectively.
NICE Investors Service analyzed that a substantial portion of the recovery results from assets acquired at the time would emerge in 2027–2028. However, the property market downturn has lowered the disposal prices of collateral assets and extended recovery periods.
In particular, NPLs were bought at higher prices in 2023–2024 than they are today. The average purchase rate among the five NPL investors fell 19.5 percentage points, from 87.2% in 2023 to 67.7% in the second quarter of this year. The recent decline in purchase rates is seen as reflecting a worsening recovery environment amid the weak property market.
Funding costs are also rising. The weighted-average yield on NPL investors’ corporate bond issuances rose from an annualized 2.97% in the second half of 2025 to 4.06% in the first half of this year and 4.75% in the third quarter. That is an increase of 1.78 percentage points from the second half of last year.
Leverage burdens have also grown. The average leverage ratio of major NPL investors rose from 2.6x in 2022 to 4.7x at the end of June this year. This reflects investment assets growing rapidly while accumulated earnings failed to keep pace. High leverage and delayed recoveries are factors constraining capacity for new investment.
The balance of NPLs held by domestic banks increased from ₩10.1 trillion at the end of 2022 to ₩18.9 trillion at the end of June this year. NPL sales by banks also rose, from ₩3.9 trillion in the first half of last year to ₩4.1 trillion in the first half of this year. By contrast, the combined outstanding principal balance (OPB) of NPLs purchased by the five major investors fell over the same period, from ₩3.7 trillion to ₩3.2 trillion.
As of the end of September this year, NICE Investors Service’s long-term credit ratings were AA for UAMCO, A+ for Daishin F&I, A+ for Hana F&I, A for Kiwoom F&I, and A for Woori Financial F&I. All five companies have a “stable” rating outlook.
NICE Investors Service researcher Cho Hyun-jin said the agency would closely monitor whether the trend continues at companies where “declining profitability and rising leverage ratios are occurring together,” and reflect it in its credit assessments.
[email protected] Reporter Kim Hyun-jung
[email protected] Kim Hyun-jung Reporter