Taiwan lenders: Quench your thirst from the same cup

Taiwanese banks have returned to the loan market in force this year, making huge commitments that in many cases they do not want to be fully allocated. This is reigniting fears that they could once again be left exposed to fluctuating interbank rates — but as long as they stick together, they can avoid the problems of the past.

  • 05 Feb 2013
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Taiwanese lenders have almost always been a reliable source of demand for Asian loans, offering a wellspring of small investments that can often take out the junior levels of a loan entirely. They are lending heavily again this year — and even going a step further.

Taiwan’s banks have swamped some recent deals. When Gas Authority of India asked lenders for $300m in January, four of the 10 banks that pitched in were Taiwanese. The recent loan for China Zhongwang also had a strong Taiwanese presence: three of the five bookrunners came from Taiwan, and the vast majority of commitments came from them. These banks are clearly hungry and they are looking to take a bigger bite.

One reason is that the slowdown in loan supply over the last six months has left them feeling cash rich, meaning that now they want to make much bigger commitments than in the past. This is partly because they expect to be scaled back in allocations — even though, as investors have often found, such expectations can be quickly deflated.

There are concerns that Taiwan’s banks may be going a step too far. But bankers in the country should not worry too much — problems will come from Taiwanese banks not lending too much, but too little. Past experience has taught them that it is best to take the majority of a deal between them.


Disruptive action

Take an example from a little more than a year ago: Taiwanese banks stepped back from the international loan market, after trying their hardest to trigger market disruption clauses. Their costs of raising funds at home had shot up and they figured forcing borrowers to pay up, or pay deals back early, was a good way to deal with the problem.

They were right, but it did not quite work out that way. They needed support from other lenders, but that support never arrived. Exactly how much support you need in a loan differs — a bare majority of lenders, sometimes more, sometimes less. But without anywhere close to a majority, the Taiwanese banks did not have the leverage to trigger market disruption clauses.

Their need to trigger these clauses was largely because the local interbank rate diverged from Libor, painfully so. But why would larger lenders from elsewhere — not having to face this problem, and still nursing key relationships with borrowers — follow the Taiwanese into such heavy-handed action?

Clearly, as it turned out, they wouldn’t. But now that Taiwanese banks are back in the market, they can make sure they pay more attention to Taiwan-targeted loans, since any funding problems that hit them will also hit a lot of other banks in their deals.

Taiwan’s banks were left out in the cold in the past, and it is easy to see why some bankers outside the country question them returning to the loan market in such scale.

But as long as the banks stick together, they can make sure that if any similar problems hit them again, they will be able to deal with them a lot more easily.

  • 05 Feb 2013

Bookrunners of International Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 7,508.01 16 15.54%
2 HSBC 7,147.22 22 14.80%
3 Deutsche Bank 5,436.77 11 11.25%
4 JPMorgan 3,674.16 10 7.61%
5 Bank of America Merrill Lynch 2,414.03 9 5.00%

Bookrunners of LatAm Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 3,783.77 4 20.92%
2 HSBC 3,266.83 3 18.06%
3 Deutsche Bank 2,977.43 1 16.46%
4 JPMorgan 1,766.98 6 9.77%
5 Bank of America Merrill Lynch 1,683.06 6 9.31%

Bookrunners of CEEMEA International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 3,111.25 5 11.65%
2 HSBC 2,253.75 3 8.44%
3 Deutsche Bank 1,520.23 3 5.69%
4 Sumitomo Mitsui Financial Group 1,341.03 2 5.02%
5 Standard Chartered Bank 1,291.27 1 4.84%

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
  • Today
1 ING 3,668.64 29 9.07%
2 UniCredit 3,440.98 25 8.50%
3 Sumitomo Mitsui Financial Group 3,156.55 13 7.80%
4 Credit Suisse 2,801.35 8 6.92%
5 SG Corporate & Investment Banking 2,478.18 21 6.12%

Bookrunners of India DCM

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 AXIS Bank 51.86 2 27.57%
2 Standard Chartered Bank 45.42 1 24.14%
2 Mitsubishi UFJ Financial Group 45.42 1 24.14%
2 CITIC Securities 45.42 1 24.14%
Subtotal 188.11 3 100.00%