Seoul: South Korea's financial watchdog announced that it has initiated an inspection into several financial institutions, including Shinyoung Securities Co., over allegations linked to the discount store chain Homeplus Co.
According to Yonhap News Agency, the inspection follows Homeplus entering court-led rehabilitation proceedings on March 4. This move came after Korea Investors Service and Korea Ratings Inc. downgraded the company's corporate bonds to A3- from A3, citing insufficient efforts to enhance its financial health. Despite being informed of the potential downgrade by a credit rating agency on February 25, Homeplus issued asset-backed short-term bonds (ABSTBs) worth 82 billion won (US$56.3 million) via Shinyoung Securities on the same day.
These ABSTBs are short-term bonds secured by future receivables as collateral. The Financial Supervisory Service (FSS) will scrutinize Shinyoung Securities and the two rating agencies to determine if the securities firm was aware of Homeplus' impending credit rating downgrade when it issued the bonds. A senior FSS official stated that the investigation will primarily focus on the timing of Shinyoung Securities' awareness of the financial distress and whether any sales or issuances occurred at that time. The official added that the regulator would also examine the information held by the credit rating agencies.
Furthermore, private equity firm MBK Partners, the owner of Homeplus, may also face scrutiny if the ongoing probe uncovers any indications of illegal activities, such as unfair transactions or fraud.