Korea Post, US firms to invest in US asset-backed securities

20 March 2017   Category: News, Asia, Global, Korea, USA   By Asia Asset Management

Korea Post, the national postal service agency of South Korea, is reportedly gearing up to invest in US commercial real estate-backed securities together with the asset management arms of Teachers Insurance and Annuity Association of America, Prudential Financial Inc, and New York Life Insurance Co.

According to a report in Korean Investors, Korea Post’s savings unit will commit about 150 billion won – 200 billion won (US$132.5 million – $176.7 million) each to new funds that will be set up to make the investment. The report, which cited investment banking sources, says the US firms will invest the same amount as the Korean agency. 

The funds are said to be eyeing senior debts secured by commercial real estate in major cities in North America, targeting annual returns of 4% – 5%.  Investments will be limited to property with a loan-to-value ratio of 65% or below, and exclude high-risk real estate assets such as development projects.

Korea Post has been shifting its overseas investment focus into relatively low-risk assets such as fixed income since last year to brace for growing market volatility, the head of its savings unit Jinyong Chung told a local newspaper earlier this year. He also said that commercial mortgage backed securities and collateralised loan obligations have been on its radar.