The outlook for the global loan market is more positive than it has been for several years. After five years of deep liquidity pushing pricing down, tenors out and covenants into extinction, the focus has moved from refinancing to the return of M&A.
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With institutional money continuing to swell coffers and new liquidity sources to tap, the private equity industry has set its sights higher than ever before. The competition for mandates is forcing banks to push structures and pricing to breaking point. But while pricing has tumbled for some deals, others have faced sticky and painful sell-downs, creating two markets in one. Adrian Simpson reports.
Prospects for the European investment-grade loan market look better than at any time over the past four years. The long-awaited revival in M&A has arrived and looks set to rescue loan banks from the tightly priced refinancings that dominated the market up until the middle of the year. Nachum Kaplan reports.
The 2005 US syndicated loan market will be remembered for its record volume of large LBO and M&A related transactions. Sponsors opened up their sizable war chests and generated some record-breaking LBOs like SunGard and Hertz. The growing institutional investor base lapped up the paper at tighter spreads as demand outstripped supply. Colette Campbell and Tim Sifert report.
Loan pricing for Central European borrowers is already at Western levels and spreads for borrowers in the prospective EU countries of South-Eastern Europe have collapsed. Across the entire region competition for mandates is fierce and a liquid local market, along with central bank control, means supply is far from plentiful. However, with some of the region's traditional lenders now looking further east, the nascent LBO market may provide new supply. David Cox writes.
International banks have flocked to the Middle East over the past year and this flood of liquidity has translated into a sharp reduction in funding costs for the region's borrowers. But for international banks, starved of returns at home, the Middle East offers good yield prospects. However, this environment is tough for local banks, which have been priced out of some syndications. But with corporate activity on the increase and huge demand for infrastructure funding, plenty more supply is expected. David Cox writes.
With the country’s borrowers on course to raise more than US$30bn this year, the Russian loan market has come of age. Unsecured lending has overtaken secured lending for the first time, and with new investors entering the market, lender competition has caused margins to fall sharply. The outlook for borrowers is bright and volumes are expected to climb further. David Cox writes.
After another year of top-heavy syndications at razor thin margins bankers are hoping for pricing to bottom in Latin American syndicated loans. Some argue that pricing is out of line with the risk, but there is little on the short-term horizon to tip the balance away from borrowers. A slew of elections and the global economic environment have the potential to turn things around. James Crombie reports.
2005 has been the classic curate’s egg for Asian loan markets – good in parts. Volumes in some markets have fallen as some borrowers have reined in borrowing, but those who wanted money have been able to access cheap funding. The good news has been the growth in higher-value transactions such as acquisition financings. Jonathan Rogers, Shankar Ramakrishnan, Prakash Chakravarti and Patricia Lee report.
Australia remains the hotbed for mergers and acquisitions in the Asia Pacific and banks, beset by a hunger for yield and assets, have been more than ready to bend over backwards to appease asset-buyers. The result? Financings that are more aggressive than ever and that are likely to remain so. Shankar Ramakrishnan reports.