Asia collar financing surges on back of Covid-19 volatility

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A sudden surge in options-based structures to finance share acquisition deals in Asia is driven by coronavirus concerns, say dealers, but it may be the start of a longer-term structural shift.

Historically, most share acquisitions in the region have been financed through margin loans, in which the purchaser pledges securities to borrow money from a bank. If the value of the shares falls, borrowers face a margin call or early termination of the loan, but if it rises they keep all the upside.

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