Loans Poll - Asia Pacific Syndicated Loan and Leveraged Finance Awards Analysis

  • 25 Feb 2008
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Broad-based Citi stays loan leader

For the fourth year running, participants in the syndicated loan market have voted it Asia Pacific Loan House of the Year.
The credit crunch will make conditions very different this year. But Citigroup’s loan bankers appear to have lost none of their enthusiasm for the market.

Participants’ vote in the poll chimes with the league tables. Dealogic records Citigroup as first among syndicated loans bookrunners in Asia, excluding Japan and Australasia.

When considering Citigroup’s loan deals in 2007, what stands out most is the variety of transactions. The bank’s activities are broadly spread across the Asia Pacific region, covering leveraged and non-leveraged deals.

"I think it is a function of Citi’s franchise across the region," says Farhan Faruqui, head of global loans and leveraged finance in Asia Pacific, "and reputation for structuring deals that anticipate market conditions."

Citigroup bankers attribute part of their success to the consolidated structure at the bank. "When our bankers meet with clients we discuss the full debt structure — from public to private, G3 [dollar, euro and yen bonds] to local [currency] or loans and bonds," says Faruqui. "The platform allows us to tailor solutions to meet the needs of our clients."

Out of the five deals that won awards in EuroWeekAsia’s 2007 loans poll, Citigroup was a bookrunner on three of them. One was the £3.67bn loan supporting the takeover of European rival Corus by India’s Tata Steel. Citi can be proud of having won this deal at an especially competitive time in the race to finance the expansion of corporate India.

Citigroup, along with ABN Amro and Standard Chartered, managed to make its way into refinancing the non-recourse debt, and its commitment on that deal is already helping it secure new mandates. Citi is understood to be close to helping Tata Motors finance its takeover of Ford’s Jaguar unit.

Rival loan bankers grudgingly accept the power of Citigroup’s franchise. "There is no denying their brand name," said one banker. "But one has to ask whether deals just go to them because of this. The corporate relationships that the bank has are definitely impressive, but is it deserved?"

2008 could be a very different year, as Citigroup comes to terms with the heavy writedowns it has been forced to make in the wake of the subprime credit turmoil. Rival bankers say they have already begun to notice a difference in the bank’s approach — although they would say that, wouldn’t they?

"There are several deals that we are looking at where Citigroup’s absence is noticeable," said another loans banker. "The bank was always a formidable and aggressive competitor but they seem to have taken a step back."

The same could be said of many houses in the Asian loan market. How Citigroup fares this year is anyone’s guess, but if its 2007 performance is anything to go by, rivals should not write it off too soon.

Reliance investor rapport pays off

It is very rare for an Asian borrower to be able to sign off on a $200m loan and then move almost immediately to launch a further $2bn facility.
But that is exactly what India’s manufacturing group Reliance Industries did in February last year. This ability to drum up such a supportive response from its lenders helped Reliance Industries win Borrower of The Year and South Asian Syndicated Loan of The Year for its $2bn loan in EuroWeekAsia’s loan market awards.

That $2bn deal was mandated to a 14 strong syndicate of ABN Amro, Bank of America, Bank of Tokyo-Mitsubishi, Calyon, Citigroup, DBS, DZ Bank, HSBC, ICICI Bank, ING, Intesa Sanpaolo, Rabobank, Standard Chartered and Sumitomo Mitsui Banking.

Of these ABN, Bank of America, BTMU, Calyon, DBS, ING, HSBC and Standard Chartered were the active bookrunners.

"It is very rare for a pure corporate deal to feature such a long tenor of 10 years straight," says Boey Yin Chong, managing director in DBS’s syndicated finance team in Singapore. "The deal broke new ground and was one of the largest corporate loans in Asia, done on its own balance sheet without other enhancements."

When you speak to many of Reliance’s client banks, the point they all jump to make is that Reliance is careful to maintain a good rapport with its lenders.

"Reliance Industries is very good at investor management among large Asian borrowers," said another active bookrunner. "Their investor management skills are second to none, which is why all the banks have such confidence in their deals syndicating successfully."

The company set a precedent by borrowing such a large corporate loan with such a long tenor. But it is also keen to price its deals correctly.

"Despite the deal initially looking audacious," says the same bookrunner, "Reliance Industries often has a much greater sense of where lenders stand, compared to even some of the underwriters."

DBS’s Chong agrees and says that Reliance always prices a deal alongside lead banks, with the intention that they then sell down the risk successfully. The company is unusually active in building a successful loan syndication, being particularly keen to meet banks and explain its own funding needs first hand.

The $2bn facility was used for capital expenditure for Reliance’s oil and gas businesses. With an average life of seven years, it paid an all-in fee of 64.5bp over Libor to mandated lead arrangers and a top level all-in of 62.5bp over Libor in general syndication. During syndication, a further 13 banks joined the deal.

"As a testimony of the success, lead banks were each sold down to 5% of the transaction size, and a total of 27 banks were involved in this landmark deal," says Chong.

Asia acclaims long term devotee

Foresight is an invaluable gift in financial markets, and CVC Asia Pacific, winner of this year’s EuroWeekAsia Private Equity Sponsor of the Year, demonstrates this strength well.

Unlike many other international private equity sponsors that have flocked to Asia in recent years, CVC has been a longstanding enthusiast for the region.

The buy-out house opened its first office in Asia in 1999 and since then has expanded to five offices. To date, CVC has completed 31 buy-outs in Asia.

"CVC has had a long presence in Asia with a broad office network," says Roy Kuan, CVC Asia Pacific’s managing partner in Hong Kong. "It also has one of the largest funds in the region." The value of CVC’s combined funds worldwide is $26bn.

This strategy is conspicuous when compared to other buy-out funds such as Blackstone, which only opened its first branch in Hong Kong last year.

CVC has three Asia-specific funds — the last one amassed $4bn at first close.

But the firm’s focus on Asia so early is not its only defining point. The company pays special attention to its relationship with its creditors, with a team in Asia devoted solely to debt, including John Kim, Vicki Hui, David McWilliam and Keisuke Hinami.

"Having a separate debt team is quite a distinct feature," says Kuan. "They keep in touch with the market and are totally focused on the debt side of the business. It’s nice for banks to have a counterpart, who can talk in depth about the market and who understands it well."

This is especially relevant at the moment, when the credit market is almost entirely paralysed and liquidity has been flushed out. Understanding the problems faced by the leveraged loan market and the concerns of lenders may ultimately lead to an easier resolution.

Perhaps it is this feature that has allowed CVC to remain busy in spite of the credit market turmoil. The firm is rumoured to be launching a new leveraged loan to refinance its $86m borrowing for China’s Plantation Timber Products, a fibreboards and laminated flooring manufacturer, and to finance an acquisition.

CVC also just acquired a 65% stake in Stella, the Australian travel agency and hotel operator, and a revised debt financing is expected to come to market soon. Considering the dearth of leveraged deals launched into the market this year, CVC is taking a brave step.

Despite these bright spots, Kuan’s approach remains cautious.

"When it comes to mergers and acquisitions in Asia there tend to be a lot more ‘M’s than ‘A’s," says Kuan. "It is hard to predict what the future holds. In a way the situation is better because equity valuations of companies have fallen, but then again the credit market is also suffering. We will just have to see how it turns out."

Local knowledge proves decisive

EuroWeekAsia’s award for Most Improved Market Profile is designed to recognise the institution that has been most successful in building its own niche in Asia’s competitive syndicated loan market.

ICICI Bank’s rapid rise in the international loan market in the last 12 months has been exceptional. In 2006, the bank was 27th in Dealogic’s league table of bookrunners of syndicated loans in Asia, excluding Japan and Australasia.

Within a year, the bank had reached 10th place. What makes this climb even more impressive is the fact that ICICI Bank has only recently forayed into the international loan market.

"ICICI Bank is a relatively young player in the international loan syndicate market," says B Krishna Iyer, chief executive of ICICI Bank’s Singapore offshore group and head of international syndications. "The bank commenced its overseas operations in 2003, starting with Singapore, and then expanded to other regions including UK, Bahrain and Hong Kong."

Even then, it took several years for the loans team to build momentum. In fact ICICI Bank only set up a dedicated syndicated loan team in 2007 — the year that it rocketed up the league tables.

The growth of the Indian market contributed greatly to ICICI’s rise up the charts, as Indian companies continued their overseas expansion at breakneck speeds. As India’s biggest private sector lender, ICICI took full advantage of its well-established relationships with Indian firms to step up and lead the loans backing several cross-border acquisitions.

The list of headline-grabbing takeovers that ICICI helped to finance is impressive. The bank led the debt supporting wind turbine maker Suzlon Energy’s buy-out of Germany’s REpower, United Breweries’ acquisition of Scottish whisky distiller Whyte & McKay for £595m, and property firm DLF’s takeover of Amanresorts.

It was also one of the bookrunners that joined the colossal £3.95bn facility supporting Indian steelmaker Tata Steel’s acquisition of its Anglo-Dutch rival Corus.

"Very few local Indian banks are as dominant in M&A financing as we are," says Iyer.

But the bank is also aware of the intensive struggle to dominate the Indian offshore market.

"The Indian offshore loan syndicate market is becoming more competitive," says Iyer, "and the bank’s abilities to deliver on large and complex deals will play an important role."

What makes this award especially fitting is that ICICI has quite a lean loan syndication team, approximately 12 strong. Unlike some other loan houses, ICICI’s loan bankers cover every facet of loan syndication from structuring to distribution and documentation. "It allows the team members to experience greater depth and flexibility, keeping them interested and motivated," says Iyer.

The bank is planning to establish a dedicated team to cater for secondary loan trading.

  • 25 Feb 2008

Bookrunners of International Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 41,733.81 194 9.42%
2 HSBC 40,945.92 235 9.24%
3 JPMorgan 37,214.87 151 8.40%
4 Bank of America Merrill Lynch 29,284.07 123 6.61%
5 Deutsche Bank 20,416.10 78 4.61%

Bookrunners of LatAm Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Oct 2016
1 JPMorgan 13,268.07 33 6.30%
2 Bank of America Merrill Lynch 11,627.56 29 5.52%
3 Citi 11,610.06 30 5.52%
4 HSBC 10,091.34 29 4.79%
5 Santander 9,533.17 25 4.53%

Bookrunners of CEEMEA International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Oct 2016
1 Citi 13,617.40 57 11.05%
2 JPMorgan 12,607.77 55 10.23%
3 HSBC 9,327.72 50 7.57%
4 Barclays 8,643.78 30 7.02%
5 Bank of America Merrill Lynch 6,561.15 18 5.32%

EMEA M&A Revenue

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 02 May 2016
1 JPMorgan 195.08 50 10.55%
2 Goldman Sachs 162.26 37 8.77%
3 Morgan Stanley 141.22 46 7.64%
4 Bank of America Merrill Lynch 114.20 33 6.18%
5 Citi 95.36 35 5.16%

Bookrunners of Central and Eastern Europe: Loans

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Oct 2016
1 UniCredit 3,966.12 27 13.01%
2 SG Corporate & Investment Banking 2,805.90 16 9.20%
3 ING 2,549.27 20 8.36%
4 Citi 2,526.98 15 8.29%
5 HSBC 1,663.71 16 5.46%

Bookrunners of India DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 19 Oct 2016
1 AXIS Bank 5,944.45 123 18.53%
2 HDFC Bank 3,792.05 100 11.82%
3 Trust Investment Advisors 3,390.86 145 10.57%
4 Standard Chartered Bank 2,299.63 31 7.17%
5 ICICI Bank 1,894.86 51 5.91%