Financial advices for corporations

Asia pacific loans reel from ongoing slowdown

HONG KONG, June 30 (LPC) - Syndicated lending in Asia Pacific (ex-Japan) plummeted 13 percent to $210.7 billion in the first half of 2016 from $241.94 billion in the same period last year, extending earlier declines as the region reels from the economic slowdown in China. The drop in loan volume in the first six months of 2016 is the third consecutive half-year decline since the end of 2014. The number of loans transacted totalled 573, down from 760 deals completed in the corresponding period in 2015, according to Thomson Reuters LPC data."The first half has been characterised by lower volumes and deal count, pricing and fee compression combined with abundant liquidity. The key for any bank serious about running an originate-to-distribute platform has been to take the right risk and reward decisions around underwriting in specific sectors, countries, thinking laterally around structures, and being aggressive around certain client situations," said Cristian Jonsson, global head of loan syndications at Standard Chartered. Lenders have leaped at any opportunity to book assets, especially loans from high-grade credits. As a result, transactions for Chinese technology companies such as Alibaba Group, Baidu Inc and Tencent Holdings Ltd , along with other blue chips like Hong Kong's MTR Corp have met with a strong reception."Lenders remain hungry for assets and this is evident in the reception many of the loans have received from the market. There has hardly been a failed syndication this year. Chinese, Japanese and Singaporean lenders are aggressive. Japanese regional banks have become more active outside Japan than they have been historically," said John Corrin, global head of loan syndications at ANZ.

Uncertainty and volatility in global financial markets have increased in the aftermath of Britain's vote last week to leave the European Union. Other political events on the calendar such as national elections in Australia in early July, the appointments of a new prime minister in the UK and a new central bank governor in India, and the presidential elections in the US in November will add to the uncertainty. Nonetheless, loan bankers are looking forward to some jumbo transactions that are in the pipeline, including those for AusGrid, China National Chemical Corp and Malaysia's Petroliam Nasional."2016 will be a middling year for loans and volumes are likely to be marginally lower than 2015," said Corrin. "It will not be a banner year, but it certainly won't be one of gloom and doom. The second half of 2016 shows promise as loan volumes are showing signs of a pick-up."

HONG KONG, INDIA SHINE While China remains the driver of the loan market in Asia, the country disappointed with a significant drop in volume in the first half to $60.2 billion - 22.1 percent lower than the $79.26 billion raised in the same period in 2015."The Greater China loan market in 1H16 has been impacted by the easing measures implemented by the PBOC [People's Bank of China]. This has resulted in reduced offshore issuance and an increase in debt raising onshore given the greater liquidity available and preference to borrow in renminbi," said Jonsson. Nonetheless, China was still the largest market in Asia (ex-Japan), with Hong Kong following close behind. Borrowers in the former British colony raised $58.03 billion of loans in the first six months of 2016, a 35 percent increase year-on-year.

That increase was largely thanks to the return of rare borrowers such as MTR Corp, which raised HK$25 billion

Bahrains nogaholding seeks debut $350 mln loan sources

Nov 24 Nogaholding, the holding company for oil and gas assets owned by the government of Bahrain, is seeking a $350 million sharia-compliant loan in what would be a first for the group, banking sources aware of the matter said on Tuesday. The firm joins a number of other oil and gas companies, including Saudi Aramco and Abu Dhabi National Energy Co., which have sought to raise money from banks in the past few months to help cushion their finances against the effects of lower oil prices. Nogaholding is looking to arrange the Islamic five-year loan before the end of the year, with the proceeds to be used for general business purposes, two sources aware of the matter said on condition of anonymity as the information is not public.

Nogaholding, which holds stakes in companies including Bahrain Petroleum Company (Bapco) and Bahrain National Gas Company (Banagas), could not immediately be reached for comment. The company was looking for an interest rate of around 250 basis points over the London interbank offered rate (Libor), but recent market moves could see this pushed up towards the 300 bps mark, according to one of the sources.

Bahrain's five-year credit default swaps, used to insure against a default, have jumped more than 20 percent since Oct. 21, a sign that investors are concerned about the country's budget situation. Also last month, Standard & Poor's cut its credit rating on Saudi Arabia, which has strongly supported Bahrain since it experienced political unrest in 2011.

Bahrain's five-year credit default swaps were at 334.9 points by 1135 GMT. But Nogaholding will have no problem raising the money, the sources said, noting there would be support from local banks for one of the most high-profile Bahraini companies. Nogaholding has not raised a loan before so its rarity value should attract banks, while its sharia-compliant structure will distinguish it from a number of other industrial borrowers currently in the loan market.

Business calls for trump, world leaders to support paris climate pact

More than 360 businesses and investors called on U.S. President-elect Donald Trump and world leaders on Wednesday to continue to support agreed curbs on global warming and to speed up efforts to move to a low-carbon economy. In a statement addressed to Trump, U.S. President Barack Obama, members of the U.S. Congress and global leaders, the group, called 360+, reaffirmed its commitment to the Paris Agreement on climate change. The 360+ group includes companies such as DuPont, Gap(GPS. N) , General Mills(GIS. N) , Hewlett Packard(HPE. N) , Hilton(HLT. N) , Kellogg (K. N), Levi Strauss & Co., L'Oreal USA, Nike(NKE. N) , Mars Incorporated, Schneider Electric, Starbucks (SBUX. O) and Unilever(ULVR. L) . The Paris Agreement, aiming to phase out net greenhouse gas emissions this century, came into force on Nov. 4 and now has backing from 110 nations including the United States.

The Nov. 7-18 meeting in Marrakesh is where U. N. officials and government representatives are trying to work out the details of the pact. However, Trump's victory in the U.S. election last week has overshadowed the event. Trump has threatened to tear up the U.S. commitment to the accord.

The 360+ group called on U.S. leaders to continue to participate in the Paris Agreement, support the continuation of U.S. commitments on climate change and continue to invest in low-carbon solutions at home and abroad. "Failure to build a low-carbon economy puts American prosperity at risk. But the right action now will create jobs and boost U.S. competitiveness," the group said, in the statement presented at U. N. climate talks being held this week in Marrakesh, Morocco.

"Implementing the Paris Climate Agreement will enable and encourage businesses and investors to turn the billions of dollars in existing low-carbon investments into the trillions of dollars the world needs to bring clean energy prosperity to all," the group added.