Taiwanese banks have started to invoke rights that allow them to pass their rising funding costs on to companies, a controversial move, last seen during the 2008 financial crisis, which highlights stress in international loan markets.
The cases, which are still rare, illustrate how the European debt crisis is causing borrowing costs to rise across the world just as the global economy slows.
A group of Taiwanese lenders this month invoked a “market disruption clause” in a syndicated loan to Xinyi Glass, forcing the Chinese industrial glassmaker to pay a higher interest rate on its HK$1.1bn (US$141m) of debt. The Hong Kong-listed company declined to reveal how much its borrowing costs had risen, citing a confidentiality agreement with all 13 banks in the syndicate, 11 of which are Taiwanese.