Investors are taking on record levels of debt to buy stocks as the South Korean equity market continues its bullish run on persistent foreign buying and market-friendly conditions, data showed Wednesday.

The so-called margin debt, or the amount borrowed to purchase securities, stood at 6.47 trillion won ($5.83 billion) as of Monday, the highest since August 2011, according to the data compiled by the Korea Financial Investment Association.

The margin debt level had hovered above the 5 trillion-won mark till the end of last year but increased sharply this year as the country's stock market continues an upward march.

Analysts said investors are increasingly confident they will be able to repay their debts and pocket a decent profit as markets rise.

"The continued rise in margin debt reflects investors' expectations for a further rise in the market," said Park Sun-hyun, an analyst at Hana Daetoo Securities.

The country's key stock index, the KOSPI, closed at 2,046.92 points on Tuesday, the highest of the year, aided by continued foreign buying. Also, the tech-laden KOSDAQ, the country's secondary stock market, has continued to climb up, hitting the highest in almost eight years.

Some analysts said rising margin debts do not seem alarming at the moment but warned that when the market declines, going on margin can be extremely painful, as it could accelerate any future market correction.

Meanwhile, local brokerages are lowering rates on loans to investors as the country's central bank cut its base rate to a record low of 1.75 percent in early March to support growth in Asia's fourth-largest economy. (Yonhap)