International Financing Review Asia April 4 2020 11For daily news stories
visit http://www.ifre.comCoronavirus rocks APAC lending
Loans league Tables Syndicated loans fall to eight-year low in QBY MARIKO ISHIKAWASyndicated lending in Asia
Pacific slumped to an eight-year
low in in the first quarter as
the coronavirus pandemic took
its toll with several countries
imposing lockdowns and a
range of business activities
grinding to a halt.
Loan volumes in Asia
Pacific (ex-Japan) dropped 39%
to US$68.92bn in the first
quarter from US$113.79bn
a year ago, while deal flow
shrank to 221 from 377 loans
completed in the same period,
according to Refinitiv LPC data
tracking syndicated lending in
international currencies.
This was the lowest quarterly
tally since the first quarter of
2012 when lending slumped
to US$62.21bn from 231 deals
in the aftermath of the 2011
eurozone crisis.
“Overall, the market has
been off to a really slow start
and outlook for Q2 is uncertain
and changing by the day,” said
Bryan Liew, regional head of
loan syndications for ASEAN
at Standard Chartered Bank
in Singapore. “We will see
more caution and maybe asset
repricing.”
Every market across the
region posted declines withSingapore being the worst-hit,
nose-diving over 84% year on
year to US$1.09bn in Q1. Faced
with an uncertain outlook, some
borrowers have sought covenant
amendments or waivers
from lenders, and many have
shelved fundraisings, cancelled
acquisitions and cut capital
expenditure.
The leveraged buyout of New
Zealand-listed dental service
provider Abano Healthcare
Group is among the deals that
have been called off, along with
a NZ$190m (US$107m) five-year
loan.
Companies in the hardest-
hit aviation, tourism and
hospitality sectors have rushed
to renegotiate terms and
draw down on credit lines.
MGM China Holdings asked
lenders in February to waive
the leverage covenants on a
HK$9.75bn (US$126m) loan
for the next 12 months after
Macau’s government closed all
casinos for 15 days that month.
Still, bankers note that the
bank loan market has shown
its resilience in previous crises,
and some expect frequent bond
issuers to turn to loans while
capital markets remain volatile.
“The coronavirus-induced
market volatility will create
a heightened focus for allcorporates on what their
funding strategy is going to
be for the next 12 months,”
said Gavin Chappell, head of
syndications Australia at ANZ
in Sydney. “I think we will see
some transactions that couldn’t
have been done in other
markets come into the bank
market.”NOT ALL GLOOM AND DOOM
Massive fiscal and monetary
stimulus packages across the
world are cushioning the
impact for some borrowers.
“As perception of credit risk
goes up, so too should credit
spreads,” said Ashish Sharma,
head of loan syndications Asia
Pacific at HSBC in Hong Kong.
“But as interest rates have come
down, and given quantitative
easing by a number of central
banks, some of the stronger
borrowers may see their overall
interest costs come down
with the significant decline in
benchmark rates, even if their
credit spreads go up.”
It is not all gloom and doom,
however, with event-driven
financings providing the silver
lining. Thailand’s Charoen
Pokphand Group is raising a
bridge loan of about US$7.5bn
for its proposed acquisition
of Tesco’s Asian business,the largest from the South-
East Asian country. Freeport
Indonesia is preparing to
launch a US$2.8bn five-year
loan for a copper smelter
in East Java into general
syndication. Vodafone
Hutchison Australia and TPG
Telecom are forging ahead
with a A$5.25bn loan for their
proposed merger.
“We often see a polarisation
effect during times of market
disruption – strong credits
in stable sectors continue to
receive support from their
relationship banks, while
weaker credits or those in
volatile sectors may struggle
to raise financing or see their
terms become less competitive,”
said Andrew Ashman, head of
loan syndicate Asia Pacific at
Barclays in Singapore.
StanChart’s Liew is also
optimistic on the region’s
prospects and expects a pick-up
of activities from the third
quarter.
“Fundamentally, the outlook
in Asia remains intact with
three of the largest economies- China, India and ASEAN – all
in growth mode and several at
the start of industrialisation,”
he said.
Additional reporting by Chien Mi
Wong and Apple Li (^)
Top bookrunners of Asia Pacific
syndicated loans G3 currencies
(ex-Japan, inc-Australia)
1/1/20 – 31/3/
Amount
Name Deals US$(m) %
1 HSBC 10 997.1 6.
2 Standard Chartered 10 986.6 6.
3 Bank of China 5 933.0 6.
4 MUFG 7 923.3 6.
5 Citigroup 4 764.5 5.
6 Citic 3 702.0 4.
7 DBS 5 678.5 4.
8 SMFG 8 672.3 4.
9 SPDB 3 641.7 4.
10 Credit Agricole 2 530.0 3.
Total 41 14,538.
Market volume
Proportional credit
Source: Refinitiv data SDC Code: S3k
Top bookrunners of Asia Pacific
syndicated loans All currencies
(ex-Japan, inc-Australia)
1/1/20 – 31/3/
Amount
Name Deals US$(m) %
1 Bank of China 59 8,175.8 16.
2 China Merchants Bank 10 4,856.7 9.
3 ABC 6 2,334.7 4.
4 MUFG 9 2,143.7 4.
5 ICBC 7 2,026.8 4.
6 SMFG 12 1,913.3 3.
7 HSBC 16 1,890.6 3.
8 ANZ 10 1,826.5 3.
9 State Bank of India 7 1,786.5 3.
10 Standard Chartered 16 1,595.8 3.
Total 186 50,929.
Market volume
Proportional credit
Source: Refinitiv data SDC Code: S
Top bookrunners of Asia Pacific
syndicated loans Int’l currencies, Rmb
and NT$ (ex-Japan, inc-Australia)
1/1/20 – 31/3/
Amount
Name Deals US$(m) %
1 Bank of China 59 8,141.9 17.
2 China Merchants Bank 10 4,825.1 10.
3 ABC 6 2,307.9 4.
4 SMBC 12 2,166.2 4.
5 MUFG Bank 9 2,143.7 4.
6 ICBC 7 2,019.6 4.
7 ANZ 10 1,821.6 3.
8 CTBC 4 1,566.8 3.
9 HSBC 13 1,526.2 3.
10 BoCom 4 1,516.4 3.
Total 166 47,752.
Market volume
Proportional credit
Source: Refinitiv data LPC
Top bookrunners of Asia Pacific
syndicated loans All currencies
(ex-Japan and Australia)
1/1/20 – 31/3/
Amount
Name Deals US$(m) %
1 Bank of China 58 8,066.3 17.
2 China Merchants Bank 10 4,856.7 10.
3 ABC 6 2,334.7 5.
4 ICBC 6 1,917.3 4.
5 HSBC 16 1,890.6 4.
6 MUFG 7 1,807.8 3.
7 SMFG 11 1,803.9 3.
8 State Bank of India 7 1,786.5 3.
9 CTBC Financial 4 1,566.8 3.
10 BoCom 4 1,523.6 3.
Total 163 45,955.
Market volume
Proportional credit
Source: Refinitiv data SDC Code: S5c
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