Asia-Pacific loans hit three-year low despite China M&A boom

Hong Kong

SYNDICATED loan volumes in the Asia-Pacific, excluding Japan, fell for the second consecutive year slipping to a three-year low of US$463.8 billion in 2016 as slower economic growth and geopolitical turbulence curtailed bank lending despite a surge in M&A (merger and acquisition) activity from China that boosted North Asian loans.

Lending in 2016 of US$463.8 billion from 1,291 transactions, was down 1.6 per cent from US$471.26 billion in 2015, and is the lowest annual figure since 2013 when US$462 billion was raised from 1,289 loans. Fourth-quarter 2016 volume of US$103.14 billion was also the lowest fourth-quarter tally since 2012 and 1.85 per cent lower year on year.

China, Asia's largest syndicated loan market, (ex-Japan), led the market with a wave of event-driven financings backing China Inc's overseas acquisition spree. It pushed M&A lending in 2016 to US$80.8 billion, equalling the previous record set in 2007 and almost 70 per cent higher compared with US$47.86 billion raised for the segment in 2015. "The loan market in 2016 has been supported by a significant increase in M&A activity, with a broader universe of Chinese corporates in particular being very acquisitive and completing jumbo-sized, cross-border acquisitions as they look to acquire technology and grow outside of their home market," said Amit Lakhwani, head of loan syndicate and distribution for Asia, at Standard …