The total value of short-term bonds sold to retail investors by Homeplus has exceeded 200 billion won ($137 million).
According to data analyzed by the office of Rep. Kang Min-guk on Mar. 16, based on figures from the Financial Supervisory Service and financial investment firms, South Korea’s major discount store chain Homeplus had an outstanding balance of 594.9 billion won ($445 million) in short-term bond sales as of Mar. 3. This includes commercial paper (CP), asset-backed short-term bonds (ABSTB) backed by credit card receivables, and other short-term corporate bonds. Of that total, 207.5 billion won ($142 million) worth of bonds, spanning 676 transactions, was sold to individual investors through securities firms, while 332.7 billion won ($228 million) across 192 transactions was purchased by general corporations. Many of these corporate buyers are believed to be small and medium-sized enterprises in the technology, electronics, and shipping industries.
This marks the first time the scale of Homeplus’ retail bond sales has been disclosed. With a substantial portion of its bonds distributed to individual investors and small businesses rather than major institutional investors, concerns are mounting within the financial sector over potential cases of mis-selling. If Homeplus issued these bonds while already preparing for a corporate rehabilitation process, effectively transferring financial risks to retail investors, the situation could escalate into a major financial scandal, similar to the past cases involving Tongyang and LIG.
Further concerns are emerging over potential losses among retail investors in real estate investment trusts (REITs) and real estate funds that hold Homeplus stores as assets. The company has followed a “sale-and-leaseback” strategy, selling its prime retail locations to secure liquidity while continuing operations as a tenant. REITs and funds that acquired these properties have relied on rental income from Homeplus to generate returns for investors. However, if Homeplus begins defaulting on rent payments, investors could face significant losses.
In response, the Financial Supervisory Service has launched a review of real estate funds linked to Homeplus properties. “A substantial number of retail investors are involved in REITs that provided development financing for Homeplus stores,” a financial regulator said. “We are working to determine the exact extent of their exposure.”
