Prakash Chakravarti’s Post

China loans near true syndication HONG KONG, Mar 28 (LPC) – Asia’s largest loan market could move from clubbish behaviour to true syndication aligning with international practices if draft measures proposed by China’s banking regulator become reality. On March 22, the National Financial Regulatory Administration announced the measures that introduce key changes, including reducing the minimum hold ratio of a sole lead bank on a syndicated deal from 20% to 15%, lowering the minimum distribution ratio from 50% to 30% and allowing for partial selldowns of loans in the secondary market. The proposals are aimed at improving the management and supervision of loan syndications, which are usually run as club deals rather than widely distributed. The NFRA, which was established in May last year as the new regulator for the finance industry (except the securities sector), has set a deadline of April 20 for public feedback on the measures, which could have positive implications for syndicated loans in China. With US$203.49bn in financing volumes in 2023, China is the largest loan market in Asia Pacific, according to LPC data. https://lnkd.in/gX6fAPik #loans #lending #syndications #corporatefinance #capitalmarkets #debtcapitalmarkets #debt #china #regulation #banks #domesticdebt #asiapacific #ifr #lpc

APAC G3 lending rebounds HONG KONG, Sep 30 (LPC) – Syndicated lending activity in G3 currencies in Asia Pacific (ex-Japan) is showing signs of a revival amid improving sentiment among market participants as a result of the kick-off of a monetary easing cycle in the United States. Loan volumes in G3 currencies clocked an impressive rebound to US$57.5bn in the third quarter ending September 30, jumping 36.5% year-on-year from the US$42.12bn recorded in the same period last year, according to LSEG LPC data. The green shoots in G3 lending activity suggest a potential turning point for borrowers and lenders in the region, following year-on-year declines of 31.49% and 27.56% in the first and second quarters of 2024 respectively. The tally for G3 currencies loans for the first nine months of this year was still nearly 10% lower at US$129.04bn compared with the US$143.05bn raised in the same period last year. https://lnkd.in/gHSYjRtd #loans #lending #syndications #asiapacific #mergersandacquisitions #leveragedfinance #leveragedloans #leveragedbuyouts #corporatefinance #interestrates #buyouts #debt #debtcapitalmarkets #bytedance #antgroup #alipay #lseg #ifr #lpc

FSA move worries Japanese lenders TOKYO, Mar 22 (LPC) – New rules calling on listed companies to disclose some of their loan covenants are causing ripples in Japan's loan market, with some lenders questioning the need for such transparency and arguing that it could prove counter-productive. Starting from April 2025, listed borrowers and bond issuers will be required to file securities reports when they raise loans with financial covenants that involve 10% or more of consolidated net assets. The Financial Services Agency says the change is necessary to protect investors. But it has rankled market participants, even though the implementation is some time away. “Many of the syndicated loans would be subject to disclosure requirements as Japanese loans usually carry covenants, unlike the international loan market where covenant-lite facilities are more common,” said a banker at a Japanese bank, while acknowledging that his bank has so far received only a few clarification requests from borrowers. https://lnkd.in/gGJg7n2U #loans #lending #corporatefinance #japan #asiapacific #regulation #financialservicesagency #debtcapitalmarkets #debt #capitalmarkets #syndications #loancovenants #corporategovernance #ifr #lpc

Japan's loan market faces reset TOKYO, Apr 19 (LPC) – The Bank of Japan’s decision to end the era of negative interest rates in March is expected to lead to more floating-rate loans in Japan, although borrowers in the country would prefer to raise money through fixed-rate financings with long tenors. Lenders are preparing to reset the equation in favour of floating-rate loans, which were dominant before the advent of negative interest rates in 2016, although there is little evidence of this happening yet. “As short-term interest rates are rising steadily, there will be a need to switch to syndicated loans with Tibor-based floating rates,“ said Takayuki Ishiwatari, joint general manager of the debt finance department at Sumitomo Mitsui Banking Corp. Short-term benchmarks have more than tripled in the past month, and three-month Tibor is now at 0.109%. Meanwhile, 10-year government bond yields have not reacted much to the BoJ’s policy change and remained in the 0.7%–0.8% range since last November when they had spiked to 0.956% after the central bank had tweaked its yield curve control policy. https://lnkd.in/g7425AhH #loans #lending #bankofjapan #corporatefinance #debt #debtcapitalmarkets #syndications #japan #asiapacific #interestrates #JGB #tibor #ifr #lpc

Shimao faces winding-up petition HONG KONG, Apr 12 (LPC) – China Construction Bank (Asia) has filed a liquidation petition against Shimao Group, in an unusual move from a Chinese state-owned lender against a major property developer that signals discontent among creditors over the company's debt restructuring proposal. The petition against Shanghai-based Shimao relates to a HK$1.58bn (US$201m) loan and kicks off legal proceedings, making it crucial for the developer to gain support from creditors for the restructuring of around US$11.7bn in offshore notes, bonds and other credit facilities, according to bankers involved in China’s real estate sector. “While it is surprising to see a top state-owned bank taking such a step, it highlights the discontent among lenders and creditors with the company’s offshore restructuring proposal,” said a Hong Kong-based loan banker. “The liquidation petition could potentially be a means to exert pressure on the developer to reopen negotiations and revise the terms of the restructuring plan.” Under the proposal, Shimao intends to restructure all of its debt totalling around US$11.7bn, through four proposed options which include bonds, loans and mandatory convertible bonds. https://lnkd.in/g6E_Pjnd #loans #lending #debt #debtrestructuring #corporatefinance #debtcapitalmarkets #capitalmarkets #china #hongkong #asiapacific #shimao #chinarealestate #ifr #lpc

Samurai loans gain popularity TOKYO, Sep 27 (LPC) – The Samurai loan market in Japan is set for a bumper crop this year, with volumes already rising to their highest level in over 15 years, and an expectation of more debut borrowers and a greater participation from Chinese lenders. Foreign borrowers are increasingly tapping the Japanese currency, with a mix of borrowers making their debuts in the Samurai loan market and others returning to raise larger amounts than their previous forays. Most are raising yen-denominated loans to diversify their funding sources, even as interest rate hikes in Japan increase borrowing costs. “I think there will continue to be a need to diversify funding sources, and we are conducting marketing from that point of view, so we may be able to bring new names to the market as early as the second half of the fiscal year [ending in March 2025],” said Ken Igarashi, managing director and the head of cross border team at Mizuho Bank’s syndicated finance department. Last week, Swiss renewable energy producer Axpo made an impressive debut in the Samurai loan market with a ¥42bn (US$290m) three-year sustainability-linked loan to diversify its financing structure and to increase its financial flexibility. https://lnkd.in/gec4VRMP #loans #lending #Samuraifinancings #Samurailoans #syndications #debt #debtcapitalmarkets #corporatefinance #japan #asiapacific #interestrates #yen #bankofjapan #axpo #mercuria #lseg #ifr #lpc

Taiwan vote adds to lenders’ woes HONG KONG, Jan 26 (LPC) – The outcome of Taiwan’s presidential election earlier this month was bad news for Hong Kong branches of Taiwanese banks, as they are expected to continue to be restricted from China-related lending. On January 13, president-elect Lai Ching-te pulled off a historic third term for his pro-sovereignty Democratic Progressive Party, and pledged continuity with the diplomacy of his predecessor towards Beijing and Washington, which has led to tensions across the Taiwan Strait. The result dashed the business prospects of the Hong Kong branches of Taiwanese lenders, which mainly handle offshore Chinese loans. “We are a bit disappointed as we will not see much change in the near future as Lai, who had served as vice-president since 2020, is likely to continue his China-sceptic policy,” said a Hong Kong-based senior loan banker from a Taiwanese bank. “If the Beijing-friendly Kuomintang party, which advocates renewed economic ties with China, had won the presidential election, we could at least resume lending to top-tier Chinese companies, especially state-owned names, to make up for our losses. Lending to privately owned firms is already a challenge due the growing credit default concerns on the mainland.” Since the DPP returned to power in 2016, Taiwanese banks have been steadily reducing their financial footprint in China, with exposure to the world's second-largest economy hitting a record low. https://lnkd.in/gk_tppuE #lending #loans #taiwan #china #election #syndications #asiapacific #corporatefinance #capitalmarkets #debtcapitalmarkets #debt #overseaslending #syndications #hongkong #ifr #lpc

Lenders win say in Bakrie workout HONG KONG, Jul 26 (LPC) – An Indonesian court has granted an ad hoc group of international lenders the right to vote in the restructuring process of Bakrie Group-controlled broadcaster Visi Media Asia and other units, raising hopes that foreign creditors may play a greater role in distressed debt situations involving the country’s borrowers. The Commercial Court of Central Jakarta Court overturned a decision by the administrators of the debtors to exclude international lenders in syndicated loans of about US$560m from participating and voting in a reorganisation process, known as PKPU, for the companies, according to a press release issued on behalf of the ad hoc group on July 22. Although Indonesian law does not work on precedent, the ruling suggests a shift to a more benevolent environment for foreign creditors, who have previously been treated harshly in distressed debt situations. This could lead to a change in sentiment in the international lending community towards Indonesian borrowers, especially those that are privately owned and not rated as top-tier credits. https://lnkd.in/gVY332Vj #loans #lending #debtrestructuring #distresseddebt #indonesia #bakrie #visimedia #asiapacific #corporatefinance #debt #debtcapitalmarkets #restructuring #lseg #ifr #lpc

China property still spooks lenders HONG KONG, Jun 14 (LPC) – Chinese property developers with more than US$25bn falling due in the next 12 months are facing an uphill battle to refinance the debt as offshore lenders remain unconvinced that Beijing’s efforts to rescue the ailing sector are working. Declining home sales as well as the steep haircuts and unfavourable restructuring terms offered to offshore creditors by some developers that have defaulted on their debt have shaken the confidence of bank lenders. In addition, offshore lenders are concerned that unsecured lending would be subordinated to secured onshore loans. “The unsatisfactory loan recoveries seen in some offshore debt restructurings have made offshore lenders wary of the risks,” said a Hong Kong-based loan banker. “When our credit committee asks about the repayment source for the offshore loans, there is no justifiable answer, because these loans are not backed by any cash-generating assets.” https://lnkd.in/g7H3wYS2 #loans #lending #china #asiapacific #realestate #restructuring #corporatefinance #debtcapitalmarkets #debt #lpc #ifr

Syndicated lending activity in G3 currencies in Asia Pacific (ex-Japan) has dropped significantly in the first six months of 2024, with loan volumes tumbling to US$47.54bn, or half of the tally recorded in the same period a year ago, as borrowers delay their financing plans amid expectations of interest rate cuts in the coming months. https://lseg.group/3L3tkmb