Syndicated lending volumes in Asia will increase this year, 51 percent of loans bankers in the region say as 84 percent expect borrowing costs to fall, according to a survey by Asia Pacific Loan Market Association.
About $9.6 billion of loans have been signed in the Asia-Pacific region outside of Japan this year, a 31 percent decrease on the $13.9 billion of facilities in the same period of 2012, according to data compiled by Bloomberg. Noble Group Ltd. is in the market for a $2 billion two-part loan, a person familiar with the matter said Jan. 15, while San Miguel Corp. is seeking bank debt of as much as $1.5 billion, a person familiar with the matter said Feb. 1.
“Market conditions are very favorable at the moment,” John Corrin, the Hong Kong-based global head of loan syndications at Australia & New Zealand Banking Group Ltd., said during a panel discussion in Hong Kong Jan. 31. “The pipeline of refinancing is strong and there’s a lot of M&A and event-driven transactions.”
The average interest margin for dollar loans in Asia fell 36.6 basis points to 252.7 basis points in the second half of 2012 from the first six months of the year, data compiled by Bloomberg show. About $561 billion of bank debt in the region matures before Jan. 1 next year, Bloomberg data show. Bond yields in the U.S. currency have risen 26 basis points to 4.739 percent as of Feb. 1 from 4.476 percent Dec. 7, the lowest since November 2010, according to JPMorgan Chase & Co. indexes.
“I’m very relaxed about volumes for the first quarter of the year,” Roland Boehm, the global head of debt capital markets, loans, at Commerzbank AG, said at the APLMA Global Loan Market Summit in Hong Kong last week. “We’re hearing that legal firms are busy, the meeting rooms are booked.”
Syndicate bankers also say corporate treasurers may see fewer opportunities to raise money in the bond market in 2013, as loan costs fall and merger and acquisition activity increases.
“It’s great the bond markets have been in such terrific shape but when M&A comes back, loans bankers will have their hands full,” said Jonathan Macdonald, the head of loan syndicate for Europe, the Middle East and Africa and Asia-Pacific at Barclays Capital. “The stage is set for an uptake in M&A activities, and I’m cautiously optimistic there will be better volumes this year.”