Taiwan's Syndicated Loans Declined by 29% in 2005

Taipei, April 3, 2006 (CENS)--Taiwan's syndicated loan market saw total loans of US$20.15 billion in 2005, down by 29% from 2004's US$28.2 billion, according to statistics compiled by Basis Point Publishing Ltd. (BP), a leading provider of Asian debt-market information and a subsidiary of Reuters.

Nevertheless, the market saw large-sized syndicated loans offered in the first quarter of this year to two leading electronics firms—Chi Mei Electronics Co., with NT$60 billion (US$1.77 billion at US$1 = NT$34); and Powerchip Semiconductor Corp., with NT$30 billion (US$882.35 million). In addition, newly established Dragon Steel Corp. is planning to raise some NT$40 billion (US$1.18 billion) in the syndicated market, and Formosa Plastics Group, one of Taiwan's largest conglomerates, is assessing the possibility of setting up a huge steel refinery, which may require capital of NT$135 billion (US$3.97 billion).

BP indicated that last year in Taiwan's syndicated loan market, the loans extended to enterprises in the electronics industry tumbled by nearly 40%, while those to the construction industry soared by 300%. It's noteworthy that in the same year, the funds raised in mainland China by Taiwanese enterprises shot up by 77%, with those endorsed by their mother companies in Taiwan posting a whopping rise of more than 200% from the corresponding figure posted a year earlier.

In 2005, syndicated loans extended to electronic enterprises shrank to US$8.3 billion, down by 39% from 2004's US$13.68 billion. Insiders indicated that electronics manufacturers—mostly liquid crystal display (LCD) panel makers—used to be the major clients in the syndicated loan market, taking a lion's share of more than 40%. However, last year Taiwan's three leading LCD panel makers, including Quanta Display Inc., AU Optronics Corp., and Chunghwa Picture Tubes Ltd., together saw total syndicated loans of merely US$2.42 billion.

Quite different from LCD panel manufacturers, construction operators in the same year boasted total syndicated loans worth US$2.65 billion, skyrocketing by 300% from 2004's US$663 million. This implied that more manufacturers in traditional industries are becoming interested in raising funds in the syndicated loan market instead of borrowing operating capital from only one bank.

Market observers pointed out that more and more Taiwanese enterprises have tried to raise operating funds in the mainland for either starting up businesses or expanding existing operations there. In 2004, loans raised in the mainland by Taiwanese enterprises posted at US$748 million, and shot up by 77% to US$1.32 billion a year later. Such loans endorsed by mother companies in Taiwan stood at US$184 million in 2004, tripling to US$556.8 million in 2005.

In 2004, the value of a syndicated loan averaged US$154 million, and in 2005 the corresponding value fell by 36.52%, to US$97.8 million. During the same period, foreign currency-based loans plunged by 40% to US$4.06 billion from US$6.81 billion.

Ratio of industries with clients in Taiwan's syndicated loan market

Industry
2004 (%)
2005 (%)

Electronics
48.5
41.2

Construction
2.4
13.2

Other manufacturing
21
14.4


Source: BP

　

Taiwan's top 10 syndicated loan providers in 2005

Rank
Bank
Syndicated loans (US$100 M)

1
Chinarust Commercial Bank
23.15

2
Bank of Taiwan
21

3
Taipei Fubon Commercial Bank
19.57

4
Taiwan Cooperative Bank
15.22

5
Taishin International Bank
12.01

6
International Commercial Bank of China
10.66

7
Citibank
9.91

8
Chang Hwa Bank
9.07

9
First Commercial Bank
8.97

10
Industrial Bank of Taiwan
8.15


Source: BP