Taiwan brokerages seek US$1.4 billion of loans, adding to rush

[TAIPEI] Three Taiwanese securities companies are seeking around US$1.4 billion of new loans, sources said.

This adds to a rush of recent fundraising, as a stock-market boom stokes demand for financial services. 

Among the three, KGI Securities is in talks with banks over a potential facility of around NT$20 billion (S$814 million), said the sources, who asked not to be identified discussing private matters.  

KGI Securities is Taiwan’s second-largest brokerage by trading volume.

Two other companies, President Securities and First Securities, are seeking loans of up to NT$20 billion and around NT$5 billion, respectively, the sources added.

All the loans would be three-year facilities and used mainly to bolster working capital, the sources noted. The talks are ongoing and details could change. 

Taiwan’s securities companies are seeing a surge in demand as the artificial intelligence boom has boosted tech companies and made the island’s stock market the fifth largest in the world.

In the past, these brokerages largely relied on other types of financing, such as bonds and commercial paper, to get new funding.

But as the buoyant equities market drives the need for more services, the companies are increasingly tapping syndicated loans to scale up. 

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That is evident in the recent loan surge. Syndicated loan volume for the sector is on track for a record this year, after last topping US$1 billion in 2007, Bloomberg-compiled data showed. 

In response to a request for comment, KGI Securities said it is evaluating the possibility of raising medium to long-term funds through the syndicated loan market. The relevant planning is still in progress, and details have not been finalised.

President Securities said the loan will further strengthen the company’s liquidity. First Securities said various financing options will be evaluated based on market conditions and business needs. 

The flurry of activity follows a spate of other recent loan talks.

Two of Taiwan’s biggest securities companies, Yuanta Securities and Fubon Securities, are seeking nearly US$1 billion of loans to expand their businesses. CTBC Securities, meanwhile, launched a NT$10 billion loan into syndication earlier this month.

Taiwan’s brokerages could get a boost from regulatory changes that are in the works.

Its stock exchange is studying new rules to ease the limit on financing that securities companies can provide to investors, chairman Sherman Lin said recently.

The bourse is also working on improving a key trading system popular among retail investors and planning longer trading hours to attract more demand, he added. BLOOMBERG