Korea's repurchase agreement (RP) loan transactions more than doubled in the first half from a year earlier largely due to an increase in RP sales by brokerages, data showed Wednesday.
The combined turnover of RP loans extended by local institutions and brokerages reached 1,713 trillion won ($1.48 trillion) as of end-June, up 119.3 percent from 781 trillion won in the first half of 2011, according to the Korea Securities Depository (KSD).
An RP allows a borrower to use a security as collateral for a cash loan at a fixed interest rate and buy it back from the lender at a set price at a later date.
The increase in RP loans came as the financial regulator imposed a measure on local brokerages in June 2011 to gradually reduce holdings of call money loans to less than 25 percent of their equity capital.
Due to the limit, securities firms have shifted to raise short-term funds through RPs.
Brokerages led the RP sales, taking up 35.7 percent of the overall transactions with the amount of funds raised totaling 8.7 trillion won, the KSD said.
The majority of the collateral used in RP sales were Treasuries, accounting for 52.8 percent, or 14.2 trillion won, followed by special bonds at 16 percent and monetary stabilization bonds at 14 percent.
Meanwhile, the outstanding value of RP loans stood at 24.5 trillion won as of June, up 40 percent from 17.5 trillion won from a year earlier, according to the KSD. (Yonhap)