LatAm Loans

The syndicated loan market is fretting about the seemingly never-ending stream of deals for Dubai Inc borrowers. Bankers should take heart from recent successes: on current form their concerns are unfounded.

Europe’s loan market is still capable of funding big deals — but these transactions are not easy, and lending appetite is still constrained. Bankers are angry, therefore, at a new form of ill-discipline they believe has crept in to this normally civilised market. This is the ‘bait and switch’, in which banks offer borrowers a low rate to win the mandate, only to put it up before launch.

Yet another deal pulled from the leveraged loan market is hardly a positive sign but the decision to withdraw the Eu620m deal for UK chemicals firm, Ineos, last week doesn’t spell gloom for the LBO sector. It merely confirms what was already known: the main factor that determines a deal’s success at the moment is the borrower’s sector.

The two jumbo deals for InBev and BG Group continued on their paths through western Europe’s syndicated loan market this week, with both getting commitments and looking to close soon.

Private equity funds will not like Standard & Poor’s move to offer full public ratings of European leveraged finance deals over Eu1bn. But they will have to lump it. The ratings are good for the market and over time the funds will get used to them.