Top Lenders See Asia Loan Boost
The region’s biggest lenders say property deals and refinancing will buoy Asia-Pacific syndicated loans in 2012 after the slowest start in eight years.
ConnectEast Group, the owner of the EastLink motorway in Melbourne, approached banks for a A$1.2 billion ($1.3 billion) loan to refinance debt, according to three people familiar with the matter, asking not to be identified because the details are private. Temasek Holdings Pte and Khazanah Nasional Bhd., state- owned investment companies of Singapore and Malaysia, may sign S$5 billion ($3.9 billion) of real-estate loans as early as next month, said another person.
Syndicated lending dropped to $12.8 billion this year, down 71 percent from the same period last year, making it the worst start since 2004, according to data compiled by Bloomberg. Companies outside of Japan have as much as $47.9 billion of bank debt to refinance this year and an additional $210 billion before 2016, data on 1,531 loans tracked by Bloomberg show.
“The pipeline in Asia is building fast,” said John Corrin, Australia & New Zealand Banking Group Ltd.’s Hong Kong- based global head of loan syndications, before today’s Asia- Pacific Loan Market Association’s seminar in Singapore. “I wouldn’t say volumes will top 2011, but it’s certainly not doom and gloom. There are quite a lot of deals which are under way but haven’t signed yet.”
ANZ organized the most loans in the region last year and was the market’s second-biggest arranger by volume.
Loan Margins Increase
U.S. dollar-denominated loan margins in the region averaged 258 basis points, or 2.58 percentage points, in the second half of 2011 compared with 236 the first six months as banks’ borrowing costs climbed.
“Deals need to be paying one to two times more than a year ago, particularly in north and south Asia, driven by the lack of domestic liquidity and against the backdrop of a more cautious credit environment,” said Boey Yin Chong, the Singapore-based managing director of syndicated finance at DBS Group Holdings Ltd. (DBS) “Banks will be also doing more due diligence on borrowers and seeking additional comfort by demanding the security of tangible assets for loans where possible.”
DBS, Southeast Asia’s largest bank, was the region’s 13th biggest arranger of loans last year of 229 lenders in the region, according to data compiled by Bloomberg.
Melco, Longfor
Melco Crown Entertainment Ltd., a casino developer, hired seven banks to arrange a loan of about $1.25 billion to fund the development of a new property project in Macau, two people familiar with the matter said earlier this month, asking not to be identified because details are private.
Longfor Properties Co., the developer controlled by China’s richest woman Wu Yajun, will meet with loans bankers in Hong Kong tomorrow as it seeks to borrow the equivalent of HK$2 billion ($258 million) in a three-year term loan, a person familiar with the matter said today, asking not to be named because the details are private.
Merger and acquisition activity will also support loans this year, according to ANZ’s Corrin. M&A volumes in China more than doubled this month versus January compared with a 31 percent slump in the U.S. as its economy is hampered by lingering impediments from the collapse in housing prices and the 2008 financial crisis.
China is among nations that have scope to boost spending and cut borrowing costs to protect their economies if the global slowdown worsens, the International Monetary Fund said on Jan. 31. While the fund cut its economic growth forecast for developing Asia to 7.3 percent in 2012 from a September estimate of 8 percent, that’s still higher than the global prediction of 3.3 percent this year.
A record $462 billion of loans were signed in the region last year compared with $379 billion in 2010, according to data compiled by Bloomberg.
To contact the reporter on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net
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