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Syndicated Loans

US loans face up to a ‘chilling’ election but EMEA undaunted

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The EMEA loans market has been so far unruffled by next week’s US presidential elections — even if in the US itself deal flow has paused and the consequences of the vote could be far reaching, according to several loans bankers.

Deal flow in the US loans market has stalled ahead of November 8 and one loans head said that the impact of the November 8 election could be “somewhat chilling”.

“Repricings were all the rage,” said the London-based banker, “but they are now taking an electoral hiatus. Deals are being delayed until after the elections. If Clinton wins, it’s widely accepted it’s going to be business as usual. But if Trump wins, expect lots of volatility with markets falling off quite dramatically.” 

Given lower loan volumes across EMEA — down 27% from 2015 — banks’ willingness to lend to the right borrowers has not been dimmed, according to one head of loans.

“People are still hungry to make this year’s budget and build pipeline for next year,” said the Munich-based banker.

Another senior loans banker, specialising in the CEEMEA region, had not seen the impending elections affecting his market. “It’s a sideshow,” he said.

Banks outside the US may be concerned about the potential for the cost of dollar funding to rise, but lenders’ enthusiasm for the large dollar deals in the market at the moment has not been affected, said one head of loans. 

This month, banks are pitching for a role on the loan for the $20bn cash component of British American Tobacco’s acquisition of Reynolds American. “All the banks are extremely supportive, despite the sector,” said the loans chief.

Even the non-US leveraged loans market, typically the quickest to respond to external shocks, has not been interrupted. “We are involved in a number of bidding situations in leveraged loans and we have not seen an impact so far,” said one levloans banker.

The biggest concern for the EMEA loans market remains the European Central Bank’s quantitative easing programme, said another banker: “Uncertainty has increased a bit alongside some QE fatigue and the effect of central bank liquidity.”

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