“They said there was credit enhancement, but it was unguaranteed”... Homeplus short-term bond victims allege ‘fraudulent sales’ [fn Market Watch]

[Financial News] Investors who suffered losses on asset-backed electronic short-term bonds (ABSTBs) backed by Homeplus card receivables have raised suspicions that A Securities engaged in “fraudulent sales.” They allege that the firm sold a product with no actual payment guarantee or credit extension while listing “Credit enhancement: Homeplus” in the product description and investment materials.
In particular, Eugene Investment & Securities, which sold a product with the same securitization structure, explicitly stated that there was “no separate credit enhancement,” making differences in how sellers disclosed the risks a key issue.
According to the financial investment industry on the 12th, the emergency committee for victims of Homeplus purchase-receivable short-term bonds says A Securities went beyond omitting investment risks and presented a nonexistent credit enhancement mechanism as though it were a safeguard for the product. It is calling for a thorough investigation and advance compensation for 100% of investors’ principal.
■A Securities listed “Credit enhancement: Homeplus”... Eugene Securities explicitly said “Unguaranteed”The “Key Summary Disclosure and Product Description for Short-Term Bonds” from A Securities, presented by the emergency committee, lists “the credit of Homeplus Co., Ltd.” under the credit enhancement category in the issue information. In other words, it listed Homeplus under a separate credit enhancement category, apart from the card receivables that were the underlying assets.
The securitization structure diagram in the disclosure document shows a separate “credit enhancement institution” providing payment guarantees, credit extensions and other assistance to the asset-backed securitization company. The committee argues that although the diagram is labeled “Example of an issuance structure,” there is no explanation confirming that the actual product had no separate credit enhancement institution.
Moreover, the glossary in the same disclosure document defines credit enhancement as establishing a safety net so that the value of principal and interest can be preserved even if losses occur. Critics say this could lead investors to mistakenly believe that Homeplus or a separate institution would back repayment of principal and interest.
Sales messages sent to retail investors also listed “A3 rating,” “Credit enhancement: Homeplus” and “Underlying asset: securitization of Homeplus card receivables” side by side. By contrast, the disclosure document from Eugene Investment & Securities, which sold ABSTBs with the same securitization structure issued by the same entity, SY Plus Jeilcha, was different. Under its credit rating information, Eugene Investment & Securities explicitly stated: “Unsecured electronic short-term bonds with no separate payment guarantee.” Its investment risk section also said there was no separate credit enhancement mechanism and warned that investors could lose their entire investment if Homeplus failed to pay the settlement amounts to card companies. Thus, for products with the same structure, one securities firm listed Homeplus as the credit enhancement provider, while another explicitly stated that there was no credit enhancement.■ The issue is not just “omitted risk disclosure” but the “depiction of a nonexistent safeguard”... 219.9 billion won in salesA key issue going forward is whether Homeplus’s ability to repay its debts can be presented as separate credit enhancement. Homeplus’s credit is related to the repayment capacity of the original debtor on the underlying receivables, and is distinct from a payment guarantee to investors or an obligation to provide funding support.
The emergency committee alleges, “No credit enhancement—such as a payment guarantee, assumption of debt or funding support from Homeplus or a separate institution—was actually provided for these ABSTBs.” It added, “The fact that A Securities nevertheless labeled it credit enhancement and repeatedly described it that way during the sales process makes this different in nature from simply providing an inadequate explanation.”
Lee Eui-hwan, the emergency committee’s executive chair, said, “They listed credit enhancement that did not even exist in the product description and sales materials, leading investors to mistake the product for a safe one. Eugene Investment & Securities, which sold a product with the same structure, clearly stated that there was no credit enhancement. Had investors been properly informed of these risks, they would never have invested.”
Homeplus also says it did not provide credit enhancement for the short-term bonds in question. The company said, “We were not involved in the issuance, arrangement, underwriting or sale of the short-term bonds, nor in drafting, reviewing or approving the product descriptions and investment materials prepared or distributed by Shinyoung Securities or the securities firm in question. We also did not provide any credit enhancement, such as a payment guarantee, assumption of debt or funding support.”
A total of 401.9 billion won in ABSTBs backed by Homeplus card receivables was issued from December 2024 through February 2025 and remains unpaid. A Securities sold 219.9 billion won worth, reportedly to 346 individuals and 63 corporations.
A Securities said, “This product is structured so that a default occurs if Homeplus cannot repay the card settlement amounts. We used the label ‘Credit enhancement: Homeplus’ to indicate that the product relies on Homeplus’s own credit.” It added, “This does not mean there is a separate third-party payment guarantee; rather, the product was issued based on the credit of Homeplus, the underlying debtor. Views may differ depending on how the concept of credit enhancement is interpreted.”
[email protected] Kim Hyun-jung Reporter