Loan Ranger: Record volumes ahead in every sector (honestly)
Loan bankers are a lovely, optimistic bunch who just want to get on with doing some deals whatever the weather, so the last thing they need is a scandalous naysayer peddling click-bait doom about their market, even if Russia is going to the wall (and it’s not of course).
With that in mind, Loan Ranger has put on his brightest shirt, cranked up the Tchaikovsky and is swigging heavily on the Kool-Aid to furnish you with a set of predictions for 2015 that you will want to show your bosses.
But first, the fundamentals underpinning this bold research. At a rival publication’s swanky awards dinner last week, it came to Loan Ranger’s attention (while being carried around the dancefloor by his predecessor) that he may have been overly bearish thus far in 2015 about certain corners of the market. And that cover-grabbing headlines about Russia looking a bit sketchy, for example, were doing loan bankers no favours.
Loan Ranger tried to point out that the last time he saw performance like the oil price and rouble have been turning in recently, it was the US ABX Home Equity index in 2007.
But his interlocutor was having none of it, and gave Loan Ranger a detailed dressing down that basically amounted to: "Cheer up, mate! Might never 'appen! Man or mouse?"
In a determined effort to be hominid rather than rodent, therefore, here is our freshest analysis.
The rattling of nerves in the second half of 2014 was merely setting the scene for the global financial market’s next leg up. Loans, as the most dynamic and opportunistic sector, will be the chief beneficiary.
Russian borrowers will return en masse after EU and US sanctions are thrown out of the window. The Ukraine crisis will be solved to everyone’s satisfaction by mid-February with a few well-crafted Valentine’s Day cards, paving the way for a massive rally in credit spreads. The only fighting will be between international lenders trying to be first to the front of the queue to pump money into the blossoming economy.
Tim Ash at Standard Bank will worry that he has nothing to write about, but President Putin will poach him for the role of press secretary and the promise of having to explicate at least five unclear policy statements every day.
At this point, the double punch of European QE and the Juncker plan will also kick in. Unbridled confidence will return to the infrastructure finance sector, with government spending on projects ramping up like crazy as Europe behaves like a hyperactive child in a sea of Lego.
M&A will simultaneously go into overdrive, with everyone buying everything in every sector and needing every loan they can get to do it. Forget 20% growth. We want nothing less than 110%. Don’t hesitate, celebrate.
The CLO pipeline will return like 2008 never happened. (What’s that? Oh, quite right, it didn’t.) Despite the abundance of leveraged loans being pumped to fill these portfolios, the un-met demand will drive another wave of synthetic equivalents.
Africa will enter a parallel universe where loans – even those linked to governments – will take just five minutes to get sign-off. And every one of these will be for a well thought out project or well understood credit – with a lot of them debuts.
Turkish corporates will throw previous caution to the wind and jump overboard for international financing, while still providing enough lira business so that local banks can also stock up like mad on loans.
CEE borrowers, with little need of borrowing, will nevertheless just clamour for huge revolving credit facilities for the hell of it. These probably won’t be drawn anyway, so it’s hardly worth bickering about the covenants.
Speaking of which, banks will set aside their previous antipathy for sterling cov-lites. It will be the “next big thing”.
European private placements will proudly pip the post of previous years and puncture pessimistic predictions. Bankers brandishing framed copies of ZF Friedrichshafen’s €2.2bn deal will congregate for a Schuldschein Schowdown and slap it like schoeshine on the year’s record volumes.
With all of this and more, loan bankers will still keep telling Loan Ranger that it’s like trying to turn a massive ship. But this will probably be from their superyachts in the Mediterranean.