IFR Asia/LPC Evolution of Asian Loans Roundtable 2016: Part 1

IFR ASIA/LPC: A warm welcome to everyone and a very good afternoon. Thank you for taking the time. Justin, could you please give us a brief overview of the year so far in syndicated loans for this business? Do you find it has changed and become more challenging?

Justin Crane, StanChart: Yes, I think it has certainly become more challenging, especially for a bank that is a significant player in the market if loan volume drops by 9% year-on-year and deal count drops by 11%. And this is based on what was already a depressed year on 2015. We also shouldn’t discount the impact of a surge in volumes of local currency loans. Over the last two years local currency loan volumes have accounted for around 60% of the total, which makes it difficult for most international banks to compete in domestic markets. There may be different funding costs, but more importantly different credit standards that you just simply cannot participate in those markets as you would want to.

Koichiro Oshima, MUFG: I completely agree with Justin. It’s not just the volumes, number of deals, but also I think pricing in general has fallen significantly year-on-year. It’s become very difficult to hit your goals in terms of fee income nowadays.

IFR ASIA/LPC: Augustine, as one of the rising lenders in the market place, what are your thoughts?

Augustine Lim, BOC: The Singapore branch of Bank of China has been around for 80 years. We come with a different perspective. We are beginning to play more in local currencies and adjusting to different credit standards. We look at ourselves as a very important financial hub and facilitator for Chinese companies expanding overseas. They prefer to borrow in US dollars, but sometimes there are alternatives. We are actually comfortable lending to these credits as we know them well and we can also share this knowledge and our experiences with our partners in Singapore and the rest of the world. We have access to the core management at these Chinese corporates and we can act as a bridge between them and other lenders outside China. We can educate both sides. Chinese borrowers can understand how banks here assess credit, pricing structures and the rules of the game. We are here to support the companies coming out and also for businesses going into China, so it’s a two-way system.

IFR ASIA/LPC: Justin, do you see Augustine’s bank and others as partners or more as competitors?

Justin Crane, StanChart: Both I would hope. Yes, at times partners and at times competitors.

IFR ASIA/LPC: Is that how you address the challenge in terms of the growing share of the domestic currency market?

Justin Crane, StanChart: No, when I referred to domestic markets, a good example today would be Indonesian rupiah. Obviously for the dollar deals that we would have done for a lot of our Indonesian clients, the preference today, as it should be bearing in mind what base rates are doing onshore plus the dollar appreciating, would be to opt for a local currency financing. Now that financing may look very different to what we would expect out of an international currency financing. So that was really my point. Similarly the peso market in the Philippines as well.

IFR ASIA/LPC: Kaili, CTBC Bank takes a very selective approach when it comes to lending outside Taiwan. How do you see the market evolving?

Kaili Jen, CTBC: We are a niche player in the regional market given that we have not had a long presence and don’t have a big customer base like Standard Chartered. We are very active in leveraged buyout financings. We pay more attention to the relationships with private equity firms and financial investors, which we are comfortable with. Our approach is to focus on top-tier companies and our credit appetite is largely concentrated on those in each country.

As far as liquidity among Taiwanese lenders is concerned, this year is special because, as Justin mentioned, the appreciation in the US dollar has prompted borrowers from some countries like India and Indonesia to rely on the domestic debt markets. As a result there is scarcity of loan dealflow and any transactions coming to market get done, which wouldn’t be the case under normal conditions. In the past, China has been a major source of dealflow for Taiwanese banks. Now with the slowdown in China, they are getting more and more interested in South-East Asian credits, but it is not easy, unless it is a top credit like Pertamina.

IFR ASIA/LPC: Considering the four commercial banks here find it challenging from a domestic currency perspective, Richard, Michel and Albert, how do you go about sourcing assets in such an environment? It seems like an overbanked market, right? Do you see that as a challenge?

Richard Monnington, PruCap: It certainly is a challenge and I think the use of the word overbanked is probably pertinent. The lack of supply and the great bank liquidity that we are seeing in the region today is pushing that pricing down and to the point where we have to make the decision as an institutional investor that it is probably too cheap to play in most of the transactions that attract that liquidity. Now we are in a slightly fortuitous position of being a global portfolio. We also don’t have to lend in the same way that a bank would. We don’t need to deploy our funds if we don’t think there is value. That means we can deploy our funds across Europe and the US where similar credits would pay probably 100bp wider than their counterparts in Asia.

We have to be much more selective in primary loan markets in Asia. For an operation like ours we would look at opportunities that require some extra structuring capability or require us to support a management plan or the repositioning of a building, where you’ll find that the bank liquidity chasing those transactions is a little less. There you can still see relative returns that are commensurate with that you’ll see elsewhere.

IFR ASIA/LPC: But there aren’t that many opportunities of the kind in Asia, right?

Richard Monnington, PruCap: Our business model is predicated with working alongside our banking partners. Again as a broad group we have a good core group of relationship banks. So we would tend to lean on those guys to provide us with supply. It’s probably the sorts of opportunities with those banks where they would prefer not to be in a club. Maybe it’s an old bilateral relationship that they are no longer happy to take all of the risk on to their own balance sheet. Again one which is, they understand if they take it into general syndication it might not be as popular a transaction. We are capable of lending in significant size so that we can be a valuable partner in that area. We don’t look to originate, we just don’t have the network really to support that. We are making ourselves better known to borrowers because of this tendency towards club transactions. It’s become a lot more difficult to get on the list if people don’t know who you are. We don’t seek to originate transactions and disintermediate the banks in that regard.

IFR ASIA/LPC: Michel, your thoughts?

Michel Lowy, SC Lowy: Prakash, interestingly we’ve talked about a market that’s overbanked. I would argue that it is overbanked, but maybe as Kaili said, it’s overbanked for top-tier corporates and increasingly so. For second tier corporates, which may be very large corporates that have long existences, hundreds of millions of cashflows, they are not overbanked. So for us as a business, 2014 and 2015 on the loan side were reasonably quiet. 2016 has been extremely active because while the market is overbanked there is more risk aversion. Traditional banks seem to concentrate much more on their top-tier clients. A large number of growing mid-tier corporates in the region can’t access financing from either the syndicated loan market or the high-yield market. They turn to participants like us who can provide a mezzanine, short-term secured financing and smaller-sized loans.

The other consequence from some risk aversion in the market place is that traditional commercial banks in the region, especially those that are running into difficulties, have also been exiting some of their smaller-sized loans. The number of investment opportunities in secondary loans is significantly higher than it has been in the last 24 to 36 months. So I would argue that the market is certainly overbanked, but only a portion of the market where the traditional player seems to increasingly concentrate on. Fortunately for us that’s the only portion of the market that we do not concentrate on.

IFR ASIA/LPC: Albert, was the thought process similar when you partnered with SC Lowy to launch the first Asia Pacific-backed, actively managed cashflow CLO?

Albert Yeoh, UOB AM: Yes, as Michel mentioned, our transaction is a high-yield transaction. We look at loans offering returns of 300bp and above and will try to achieve an average spread of 450bp. That is the target we need for the CLO transaction to work. It’s a portfolio of loans and needs to be diversified. It will be rated. Given our transaction size of US$300m, the bite size of the loans is not big, probably around US$5m to US$10m. So, banks are willing to sell down to us. Our parent UOB is one of the key players in the Asian loan market. Sourcing from the primary is going to be sufficient to come up with the number of names in our portfolio. Moreover, SC Lowy can also source from the secondary markets. So with that I think we are pretty positive and are able to source the loans to form this transaction.

IFR ASIA/LPC: I can see Oshima-san is already rubbing his hands in glee. UOB AM and SC Lowy are looking at assets yielding 300bp–350bp, which is essentially in the high-yield domain. Generally, the mega banks in Japan lend money to the top-tier names. What are the considerations when you go into a situation originating a deal from an Asian borrower?

Koichiro Oshima, MUFG: I think that was a very relevant issue for us. MUFG plays in more of the investment-grade category because, as Augustine said earlier, you really need to understand the client to be able to price certain credit. We are not really comfortable with some of the smaller names as we don’t know them enough. At the same time I think, I don’t know who exactly quoted this, but it’s a VUCA world nowadays. VUCA is volatility, uncertainty, complexity and ambiguity. We are competing against a much bigger variety of institutions nowadays for the good names. So it’s very difficult to really make your strategy work. One of the things we are finally doing is to go local. We have invested in Krungsri Bank, a local bank in Thailand. Our only platform in Thailand now is Bank of Ayudhya Krungsri. They are involved in everything from retail to all kinds of loans, auto loans, consumer credit, etc. So it’s much easier now for us to look at Thai names. As MUFG has one platform we believe that in order to play with some of the more difficult names, we really need to have local presence and local knowledge and that’s one direction we are going.

IFR ASIA/LPC: Justin, what Oshima-san just said is one way of dealing with that domestic currency challenge. Obviously that’s a very cumbersome and long drawn-out process and by your own experience in some parts of Asia, such as in Korea, it doesn’t necessarily pan out the way you intend it to be. How do you counter that challenge and convince borrowers to go for a US dollar borrowing if you don’t have the domestic currency capability?

Justin Crane, StanChart: First and foremost it’s about what is right for the client. So you don’t want to be pushing a client into a dollar financing when it makes more sense for them to be doing a domestic bond. Until the syndicated loan market is as compelling or a more compelling proposition, it will lose share to local currency and so it should. That’s a healthy capital market in my view.

IFR ASIA/LPC: But then the outlook doesn’t look great because you already had a very slow year for the loans product. If the domestic currency part of the funding markets keeps growing, there is not going to be enough for international banks?

Justin Crane, StanChart: Yes, but we have all been here long enough to know that there are cycles in this. We are just in a cycle at the moment, which will be different to the last, there is no doubt about that. The fact is this isn’t just an Asian syndicated loan market phenomenon. Volumes in Japan, Australia and Europe are down. So globally until there is new investment from governments and then the private enterprises follow accordingly, we will be where we are. Base rates can change pretty quickly as we have seen. The renminbi devaluation last year caught everyone by surprise. That was a game changer. Now that might change again. No one foresaw that coming and we won’t foresee whatever the next thing is. So you just have to adapt your business model as best you can. In the end as long as you are client-centric and deliver what you can deliver that’s all you can do.

IFR ASIA/LPC: Oshima-san, negative interest rates in Japan will make it worse for your competitors as the playing field was already uneven and loaded in favour of the Japanese banks. Now that the cost of borrowing is so low, are you on a mission to go and book assets as much as you can?

Koichiro Oshima, MUFG: It might be quite the other way around. Funding costs might be low, but lending rates are also low as interest margins have been suppressed. For MUFG, the issue is it’s very difficult to earn what we used to in the Japanese market. So although the competition is harsh, the international side of the business is only where we are seeing growth. We need to still think of ways to increase our top line overseas. Also for some of the Japanese institutions, which play in that market, the absolute return is so low in the Japanese market that they will sometimes, regardless of currency, still invest overseas.

IFR ASIA/LPC: Mike, what is the state of play in the leveraged finance market? There is always a lot of talk of private equity funds raising money for Asia, but there hasn’t been as much in terms of investments in buyouts.

Mike Samson, StanChart: If you look at the leveraged market and its potential and cast your mind back to the Japan Telecom deal in the early 2000s, all the leveraged finance desks of the banks had been formed then and there were expectations that the path and trajectory in Asia would mimic Europe leading to large buyouts. From that point to today only a handful of billion-dollar plus trades have been transacted. There is still a lot of dry powder as a lot of private equity firms, especially in the beginning of 2012 and 2013, raised big sums of money. We estimate that dry powder to be around US$100bn at least. This year alone US$4bn–$5bn has been raised for Asia. With so much dry power still on the sidelines, one positive is that there is impetus to deals coming into 2017 and 2018. The flip side is that a lot of money is chasing too few deals and therefore you are going to see buyouts coming at EV/Ebitda multiples of maybe 15x–20x because those are the zones where deals can get done. The other point to note is that the leveraged finance market is really at best 10%–12% of the total loan market. The vast proportion of what gets raised in the loan market in Asia is not for an acquisition or for a leveraged recapitalisation. So against such a backdrop leveraged finance in Asia hasn’t really fulfilled the potential that people saw in it.

However, on the other side many of the conglomerates or large national champions in every market, such as China, the Philippines, Singapore and Thailand are going overseas. They have outgrown their domestic market and are looking at opportunities in the West and in Australia. Most banks have modified their strategy on how to access the leveraged market by not only emphasising our financial sponsor clients, but also the strategic sponsors. It is that growth, and to your point around domestic currency, that is actually the counter-push that as the companies onshore grow beyond their borders, chances are they will require the help of international banks to fund in G3 currencies. There is a lot of domestic liquidity in dollar or in euro terms that can follow those companies into their new markets in the West.

IFR ASIA/LPC: All of you can play a role in cross-border acquisitions. We have seen the game has changed significantly with Chinese companies going offshore. Three to five years back there was some hope that at least foreign banks could play a role in cross-border acquisition situations from China. Augustine, Chinese banks have aggressively supported China Inc’s overseas drive. ChemChina is a good example. It’s the largest acquisition from China and yet the acquirer initially leaned heavily on one Chinese bank. How do you justify something like that?

Augustine Lim, BOC: I can’t claim to know everything in the deal. What I see is a lot of push from the Chinese government as well as the private sector to venture out to get technology know-how and to improve the production. There is a lot of synergistic potential to be reaped from those deals. As Bank of China, in these kinds of deals we do want to lend our support, but then again the deal sizes are huge. A lot of the time we can’t involve too many banks at the onset because of sensitivity and confidentiality issues, especially regarding listed companies. In WH Group’s [formerly Shuanghui International Holdings] acquisition of US pork producer Smithfield Foods, Bank of China originated the deal, but it also shared the pie with other banks. We can’t handle everything ourselves. Maybe at the onset we have to, but we really look to sharing the pie with the rest of the other banks. To the extent that the Chinese government looks at it as a strategic deal and where you see recourse – it’s seldom that you see recourse – sometimes, then you know it’s not just ourselves but as a whole, the Chinese corporates coming together with the Chinese and other international banks. So there’s a lot of room for everyone.

IFR ASIA/LPC: Justin, as an international bank, how do you get your foot in the door in those kind of situations and play a meaningful role, leading the deal and transferring the risk to other participants?

Justin Crane, StanChart: First and foremost it has to be a client that is looking to acquire or is the acquisition target. That is how you would get a meaningful role. I’m not sure why we are surprised that the Chinese banks or Chinese companies are changing the lending landscape, not only in Asia, but globally. Four Chinese banks figure in the top 10 banks in the world and five Chinese companies are in the top 50 companies in the world. So it would be incredibly strange if they weren’t changing the landscape. This is very much the new normal. Yes, major investment banks aren’t as involved as they have been in the past, but again to Augustine’s point, if a large Chinese company is making an acquisition, who understands that company best? It will be their relationship bank from onshore.

IFR ASIA/LPC: So do you see the Chinese banks as a threat or a partner?

Justin Crane, StanChart: These are deals that didn’t exist around five years ago. Standard Chartered have been on some of these deals. Our view is that if it’s a client, it doesn’t matter where they are from. If they have relationship banks you end up working with them. This is all new incremental deals to what we had seen before. So that’s a good thing.

IFR ASIA/LPC: Event-driven financings present the best opportunities to make money for commercial or investment banks. When you see those opportunities that are coming are somewhat skewed towards one segment of the market how do you cope with that?

Justin Crane, StanChart: You cope as best you can, but it’s really for others to step up and compete. By that I mean other international corporates or the sponsors, etc. So you play with the cards that you are dealt. At the moment our Chinese clients are acquisitive and we support them. If a deal is predominantly recourse, there isn’t going to be as much juice. At the same time there is a lot less risk.

IFR ASIA/LPC: Mike, on that point about leveraged buyouts, do you see a lot more financial sponsors from China getting active in situations?

Mike Samson, StanChart: Yes and no! I think if you start gravitating out of North Asia the influence of the Chinese PEs is less. It’s just a matter of time, especially in this part of the world, we will see them. Having said that the most recent and possibly the largest financial sponsor deal for the year – TPG-MBK’s buyout of Wharf T&T – was still a traditional private equity type transaction. There are three or four factors that influence such deals. The first factor is that these private equity shops have been in the market now for almost a decade. They have formed relationships with banks and, more importantly, with sellers, with families, with conglomerates. When there is a willingness to sell they will get that call. The second aspect is that they do have dry powder and the energy and the drive to deploy that dry powder. KKR, TPG, CVC have deployed that capital in a very big way with some success. They are probably going to be on the road to start raising a new fund. The third factor is that there is just a general familiarity in the banking market in terms of banks joining these syndications. If you look at how MMI, for example, performs. MMI is in an industry – precision machining for hard discs – that could be challenging, but because of the reputation of the sponsor behind it, still attracts quite a significant amount of support from foreign banks, Taiwanese and Chinese banks. I think I haven’t seen it yet in terms of the growth outside of China, but it’s coming. For sure, there will be PE firms similar to MBK coming out of China that will give their Western counterparts a real run for their money.

IFR ASIA/LPC: Kaili, your bank has worked hard to develop relationships with some of the international private equity firms. Do you agree with Mike and also what has your experience been?

Kaili Jen, CTBC: In the past four years we have been very active to form relationships with the financial investors. We are new to the regional market and don’t have a very strong local relationship manager support like MUFG or StanChart. The product bankers in our firm have to carry out our own credit assessment. We only focus on the top-tier or the very large-sized financial sponsors because they have a proven track record. That’s why you see the Taiwanese banks participate in the large buyouts. Of course, the returns are another attraction. Our credit is of the view that the PE firms are professional and do their due diligence when they look at a target. When they invest into a company they manage to cut costs and rationalise the operations of the target. A lot of companies in this part of the world fall short in terms of transparency. So for lenders, an LBO loan is better than some corporate financings that come with greater leverage of more than 4x–5x but don’t pay as much as LBO loans. That’s why you see more and more Taiwanese banks have realised this trend and are following us to join the LBO deals. For us, sometimes it’s more the quality of financial investor that gives us comfort. Of course, we would have done quite a lot of due diligence on the target, but it’s more the financial sponsor in which we have confidence.

IFR ASIA/LPC: So you are saying that dealing with the financial sponsors is better than dealing with the corporates?

Kaili Jen, CTBC: Actually before coming out to the international market, I was involved in structured finance and focussed on LBO deals in Taiwan. Financial sponsors have a similar mindset to loan bankers. It is not that difficult to deal and communicate with them. They have their own credit committees to approve the process and they have to justify their credit criteria as well. With regard to Chinese PEs, more and more of them are very active in China, but you can’t exclude the possibility that they will venture out because they have huge liquidity. They can just team up with the Chinese companies on acquisitions. Some of them are also trying in the regional market.

IFR ASIA/LPC: Justin, Mike mentioned earlier about US$100bn or so of dry powder that sits with the private equity guys. Obviously there is pressure to put that to use and in situations it can lead to very, very aggressive behaviour with buyouts coming with multiples of maybe 15x–20x. To achieve their internal rates of return (IRR), financial sponsors will look to load as much debt as possible. We know that the Asian market is predominantly a bank market that is averse to high leverage. How do you go about structuring a deal like that and do you see an opportunity for partners like SC Lowy and maybe even Pru Cap in those situations?

Justin Crane, StanChart: I don’t think that we have seen leverage levels go to anything like what we saw in the last leveraged finance boom, nor do I think they will. That’s partly because of the leveraged lending rules in the US and we can assume that 5x–6x is where it ends up being capped at. That excess dry powder goes into the equity cheque. The IRR that private equity firms now need to deliver is relative to the IRR of what investors can get elsewhere which is much, much lower than it used to be, because of negative interest rates etc. They move with the rest of the market, so hence their ability to put in more equity and maybe not achieve the IRR that they are used to. Just on Chinese private equity, let’s not forget Hony Capital bought Pizza Express and without them there would be no Pizza Express in Singapore and I would be five kilos lighter.

IFR ASIA/LPC: Michel, in these kind of situations where financial sponsors are looking for that extra turn of leverage, do you see that as an opportunity for institutional investors such as yourselves and how far can you go? What is your appetite in terms of pushing that leverage level a bit higher so that the financial sponsor meets its objective?

Michel Lowy, SC Lowy: It depends on what pool of capital you are talking about within the different pools of capital that we run. In terms of us being the pool of capital that’s available as part of an LBO to add one turn of financing, yes, we can do that. Traditionally though it’s not what we do. We are generally more involved as the only financier when there is no other financing means available. If we need to do a DIP [debtor-in-possession] financing to help a corporate exit bankruptcy we will participate and be the sole lender and bring in a few partners. A few months ago we participated in the restructuring of an Australian mining company where we made an offer to the entire syndicate of banks, took them out and restructured the entire obligation. So that’s more often what we are going to do where the capital that we bring in is going to provide liquidity to traditional banks, which then can do something else. We can participate in a mezz deal alongside senior banks in a primary deal. But so far I haven’t really seen transactions where the appetite is sufficient. That I think goes back to what Justin talked about, that the targeted return for private equity firms has gone a lot lower. It’s very difficult for them to pay double digit pricing on a mezzanine piece when their targeted returns are not far from what they would pay you. And while we have had a number of conversations in the last 12 months, in the end they just decided to go with the other pool of capital. That brings me to the last topic, which is the CLO that Albert and I, under the leadership of Standard Chartered, have been trying to lead. That pool of capital would be very complimentary because it would be able to provide mezzanine on a primary basis in high single digits and not at 11%–12%, which makes it irrelevant and not economical anymore for the financial sponsor.

IFR ASIA/LPC: Where are you at this point in time on the fundraising for that CLO and how soon can you start deploying that capital?

Michel Lowy, SC Lowy: That’s the million dollar question. It’s a first in Asia, so it has taken longer than one would expect. It’s focused on Asian loans, which is a product that’s not very well known outside of a small group of people. My hope is that at the latest by January we would be putting money to work. Realistically we are now dangerously approaching December and things have taken a lot longer than what we had expected in the first place.

IFR ASIA/LPC: Albert, what are your thoughts?

Albert Yeoh, UOB AM: Yes, being the first CLO deal people always compare to a US or a European transaction. Asian buyers participating in the US transaction will look at how liquid the transaction would be in terms of a triple A transaction. If it is equity then I would demand higher. This is where we want to be different. We want to tell them we have assembled a very unique team where UOB AM will focus on the primary market, and SC Lowy will look at primarily on the secondary loans, which is their strength. That team I think is very unique that we can offer to institutional clients wanting loan assets. Unit trusts and institutional funds find it a bit difficult to participate in loans because of the public and private nature of the information. You can’t have a team that wants to participate in both. Our team has been separated out from a unit trust or a flow business team. They will deal with the public side, while we deal with the private side. We can participate in their meetings to understand what flows they have on the public side. We can’t contribute in terms of information that we receive from the private side. So this product provides an opportunity for funds wanting to access the loan market and participate in different levels of risk. You have risks ranging from triple A to double B to the equity tranche. I think that product gives an opportunity for Asian investors to look at a loan, but it is a challenging process to tell the investors that this Asian deal that we are bringing is similar to a US transaction. It will not be similar because of the highly liquid state of the US Term Loan B market. In a typical US transaction you have 150–200 names in a portfolio, whereas for our transaction we are looking at initial portfolio of 50–60 names. So this education process is taking a little bit longer than we expected, but I think hopefully we are getting there.

Michel Lowy, SC Lowy: What I didn’t really realise when we started this venture nine months ago is that the institutions that would be the most interested in the product are Chinese. When I listen to Kaili and Augustine I realise why, because those institutions are in the banking business but they are banking large clients that they know very well. They don’t have access to the second-tier clients that our CLO fund will be lending to, and don’t necessarily have the experience and the relationships. Those are people that we have been dealing with for the last 10, 20 years and we will do those smaller loans, something they can’t do currently. Maybe they will do it five years from now and then they won’t need us, but at this stage they need a conduit to access that and our conduit would be very unique.

IFR ASIA/LPC: Asia presents a chicken-and-egg type situation. You have banks that primarily lend for relationship reasons and then they hold on to it until maturity. Trading and portfolio management are still very nascent in this part of the world. What will it take for other CLO funds to take your lead and establish a second-tier of capital, the institutional capital that we sorely lack in this part of the world?

Michel Lowy, SC Lowy: I would slightly disagree with you. I have been investing in loans in Asia since 1997 and in the last two years it may have been slow, but it’s a completely different landscape. Around 15–20 years ago a bank would only ever sell when the corporate was completely stressed, when the company had to fight bankruptcy. In the last two or three years it’s been rapidly changing and many institutions are now much more actively managing their portfolio. Whenever a corporate breaches covenants, credit committees assess whether or not it makes sense to hold on to the asset or sell it at 90 or 95. Certainly in the last few years a new market is emerging where you can buy assets at 85–95, which really was not the case 15–20 years go. In part, it’s just a trend for banks to be much more active about managing their balance sheet. In part it’s the fact that the syndicated loan market is a lot more developed than it used to be. When you have a lot more participants in a market that is not their own home market it becomes a lot easier for them to make a decision to sell for pure economic reason and disregard the relationship. So I’m very confident that once we close that CLO in a few months you are going to see a few more on the back of it.