Asset Pricing

CD/CP

CD, CP, ESTB

  • CD (Certificate of Deposit)
    • Savings certificate with a fixed maturity date and specified fixed interest rate
    • Restrict access to Funds until maturity
    • Any one with certificate can redeemed the funds at the end of maturity date
    • CD91 rate is one of the reprehensive short-term interest rate that KOFIA announce
    • Major index rate on Market yield inked loans, flowing rate bonds, IRS(Interest Rate Swap) and etc.
  • CP(Commercial Paper)
    • In general, a firm with good credit status issues a credit note based on self-credit in order to raise short-term funds such as working capital
    • Classified as promissory notes under the legislation
    • Distinction from promissory notes for commerce
  • ESTB(Electronic Short-Term Bond)
    • Staring to Issue from JAN 2013, To complement the disadvantages of CP and to replace CP
    • It has same characteristics as CP
    • Issued electronically rather than physical note.
    • Improved the disadvantages of CP, by publishing/disclosing detail information and distribution information
inform of Classification(introduced, Characteristic, Legal Characteristic, Issuer, Investor, Finance intermediary, Maturities, Min. Amount, Interest, interim repurchase), CD, CP, ESTB
Classification CD CP ESTB
introduced May 1974 Aug. 1972 Jan. 2013
Characteristic short-term financing for banks short-term financing short-term financing
Legal Characteristic Bailment subject to consumption Promissory notes, Debt Securities Bond
Issuer deposit bank Enterprise Enterprise
Investor Financial institution Financial institution, Corporation, Individual Financial institution, Corporation, Individual
Finance intermediary Securities, investment Bank, Money Brokerage Securities, investment Bank Securities
Maturities Min. 30 days No limitation Max. One Year
Min. Amount No limitation Securities firm: KRW 100 Mill, Others: No limitation KRW 100 Mill.
Interest Discount, 부리식 Discount, 부리식 Discount
interim repurchase Not allowed No limitation No limitation

ABCP and ABSTB

inform of ABCP(Asset-Backed CP), ABSTB(Asset-Backed ESTB)
ABCP(Asset-Backed CP)
  • ABCP & ABSTB is issued by SPC(Special purpose Company) to rise capital in consideration of the underlying assets or future cash flows of a corporation or financial institutions
  • Funding through ABCP / ABSTB is preferred because it provides off-balancing effects for issuing companies and allows for flexibility in funding through continuous repayment at short-term interest rates.
ABSTB(Asset-Backed ESTB)

General Structure of ABCP

inform of General Structure of ABCP