The issuance of asset-backed securities in South Korea sank 39.2 percent in the first quarter of this year from a year earlier as the state-run mortgage loan agency saw a drop in its financial instrument sale, the financial watchdog said Thursday.

A combined 8.1 trillion won ($7.8 billion) worth of ABSs were issued in the January-March period, compared with 13.4 trillion won a year earlier, according to the Financial Supervisory Service.

ABSs are derived from underlying assets such as car loans, home equity loans, credit card receivables and student loans.

The FSS said the decline mainly came as the Korea Housing Finance Corp., the state-run mortgage agency, reduced its ABS issuance 71.8 percent on-year to 2.3 trillion won from 8.1 trillion won over the cited period.

The KHFC is selling long-term fixed-rate mortgage funds as part of a policy effort to support the financially weak. (Yonhap)