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Asia pacific loans reel from ongoing slowdown


´╗┐HONG KONG, June 30 (LPC) - Syndicated lending in Asia Pacific (ex-Japan) plummeted 13 percent to $210.7 billion in the first half of 2016 from $241.94 billion in the same period last year, extending earlier declines as the region reels from the economic slowdown in China. The drop in loan volume in the first six months of 2016 is the third consecutive half-year decline since the end of 2014. The number of loans transacted totalled 573, down from 760 deals completed in the corresponding period in 2015, according to Thomson Reuters LPC data."The first half has been characterised by lower volumes and deal count, pricing and fee compression combined with abundant liquidity. The key for any bank serious about running an originate-to-distribute platform has been to take the right risk and reward decisions around underwriting in specific sectors, countries, thinking laterally around structures, and being aggressive around certain client situations," said Cristian Jonsson, global head of loan syndications at Standard Chartered. Lenders have leaped at any opportunity to book assets, especially loans from high-grade credits. As a result, transactions for Chinese technology companies such as Alibaba Group, Baidu Inc and Tencent Holdings Ltd , along with other blue chips like Hong Kong's MTR Corp have met with a strong reception."Lenders remain hungry for assets and this is evident in the reception many of the loans have received from the market. There has hardly been a failed syndication this year. Chinese, Japanese and Singaporean lenders are aggressive. Japanese regional banks have become more active outside Japan than they have been historically," said John Corrin, global head of loan syndications at ANZ.

Uncertainty and volatility in global financial markets have increased in the aftermath of Britain's vote last week to leave the European Union. Other political events on the calendar such as national elections in Australia in early July, the appointments of a new prime minister in the UK and a new central bank governor in India, and the presidential elections in the US in November will add to the uncertainty. Nonetheless, loan bankers are looking forward to some jumbo transactions that are in the pipeline, including those for AusGrid, China National Chemical Corp and Malaysia's Petroliam Nasional."2016 will be a middling year for loans and volumes are likely to be marginally lower than 2015," said Corrin. "It will not be a banner year, but it certainly won't be one of gloom and doom. The second half of 2016 shows promise as loan volumes are showing signs of a pick-up."

HONG KONG, INDIA SHINE While China remains the driver of the loan market in Asia, the country disappointed with a significant drop in volume in the first half to $60.2 billion - 22.1 percent lower than the $79.26 billion raised in the same period in 2015."The Greater China loan market in 1H16 has been impacted by the easing measures implemented by the PBOC [People's Bank of China]. This has resulted in reduced offshore issuance and an increase in debt raising onshore given the greater liquidity available and preference to borrow in renminbi," said Jonsson. Nonetheless, China was still the largest market in Asia (ex-Japan), with Hong Kong following close behind. Borrowers in the former British colony raised $58.03 billion of loans in the first six months of 2016, a 35 percent increase year-on-year.

That increase was largely thanks to the return of rare borrowers such as MTR Corp, which raised HK$25 billion

Bayer signs $142 billion acquisition loan


´╗┐Bayer (BAYGn. DE) has signed a $14.2 billion acquisition loan backing its purchase of U.S.-based Merck's (MRK. N) consumer care business, the lead banks said in a statement on Wednesday. The loan was underwritten on an equal basis by mandated lead arrangers and bookrunners Bank of America Merrill Lynch, BNP Paribas and Mizuho Bank and saw strong support from Bayer's core relationship banks with 23 banks joining in syndication. Mandated led arrangers were BBVA, Santander, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Commerzbank, Credit Agricole CIB, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, RBS, Societe Generale, SMBC and Unicredit.

Lead arrangers were ANZ, Bank of New York Mellon, BayernLB, ING, Intesa SanPaolo, Helaba and SEB. The financing comprises a $12.2 billion bridge to capital markets facility and a $2 billion medium-term facility. The one-year bridge loan pays 25 basis points (bps) over Libor, while the four-year facility pays 50 bps, as previously reported.

The bridge loan is expected to be taken out in the capital markets through a combination of senior and hybrid corporate bonds. The financing is Bayer's largest loan financing since its 16.5 billion euro ($22.35 billion) acquisition of domestic rival Schering in 2006, which was funded with a 7 billion euro syndicated loan and a 7 billion euro bridge loan via Citigroup and Credit Suisse.

Bayer is rated A- by Standard & Poor's, A3 by Moody's and A by Fitch.