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Rlpc asia pac syndicated loans hit record $462 bln


´╗┐* China and Hong Kong set new loan volume records* North Asia lending of $244 bln 66 percent higher than 2012* M&A lending up 63 percent to $46 blnBy Jacqueline PohHONG KONG, Dec 31 (Reuters Basis Point) - Syndicated lending in Asia Pacific (excluding Japan) hit a record high of $462 billion in 2013, showing an increase of 51 percent on $307 billion in 2012, as demand from Chinese companies doubled, according to Thomson Reuters LPC data. Chinese loan volume soared $117 billion, up 99 percent on a year earlier, as China's companies and provincial governments borrowed heavily to finance acquisitions and infrastructure. Hong Kong also set a new record of $80 billion in 2013, with an 86 percent increase on 2012. Nearly 70 percent of Hong Kong loans were for mainland Chinese companies, which moved offshore to raise cheaper foreign currency ofloans after government regulations curbed onshore US dollar lending in May. Strong growth in China and Hong Kong boosted North Asia lending to $244 billion, up 66 percent on $147 billion in 2012.

Southeast Asia's loan markets shrugged off macroeconomic weakness and currency depreciation in India and Indonesia and volume rose 51 percent to $80 billion from $52.6 billion in 2012. Malaysia, Philippines and Thailand also set new loan volume records. Asia saw more jumbo multibillion dollar loans in 2013 and average loan sizes of roughly $400 million were 20 percent bigger than in 2012. The biggest loan of the year was a 1.98 trillion yen loan for Japanese wireless carrier SoftBank Corp in September, which refinanced a one-year bridge loan from December 2012 that backed SoftBank's $21.6 billion acquisition of US-based telecom Sprint Corp.

Japan was Asia's biggest loan market in 2013 with volume of $276 billion, but lending dipped 15 percent from $324.5 billion in the previous 12 months due to reduced levels of merger and acquisition (M&A) activity. Other jumbo Asian loans included an $8 billion refinancing for Chinese e-commerce company Alibaba Group and a $6 billion bridge loan backing Thai convenience store operator CP All Pcl's takeover of Siam Makro Pcl."It is not every year that we see $8 billion or $6 billion deal sizes, but $2 billion or $3 billion is normal all of a sudden," said Aditya Agarwal, head of loan syndicate for Asia Pacific at Royal Bank of Scotland. M&A INCREASING Excluding Japan, M&A activity in Asia Pacific rose 63 percent to $46 billion in 2013 from a year earlier. Hong Kong was especially busy with 37 percent of acquisition loans backing Chinese firms' overseas expansion. China National Offshore Oil Corp raised $9 billion in two separate loans backing Australian and Canadian acquisitions, and pork producer Shuanghui International Holdings Ltd took a $4 billion acquisition loan to buy Smithfield Foods of the US.

Leveraged loans backing private equity buyouts climbed 20 percent to around $8.5 billion from $7 billion in 2012. Deals included a $1.075 billion loan backing the $3.7 billion buyout of US-listed Chinese display advertising company Focus Media Holding Ltd, which is the largest leveraged buyout of a Chinese company to date and more are expected."The success of recent LBO financings will encourage private equity sponsors to tap the loan market," said Ashish Sharma, head of Asia Pacific loan syndication at Credit Suisse. M&A activity pushed Singapore volume 21 percent higher to $40 billion in 2013 from $33 billion a year earlier due to a S$9.3 billion

Rlpc buyout shortage drives aggressive terms on french loans


´╗┐French broadcasting masts operator TDF has followed veterinary pharmaceuticals firm Ceva Sante Animale in opting for a super-aggressive structure for its upcoming 2.65 billion euro ($3.66 billion) buyout loan, despite French deals being unpopular among investors. Borrowers are pushing the limits of what they can achieve on large buyout loans. Favourable market conditions are allowing them to reduce protection for lenders, including fewer or no covenants in deals and reducing equity contributions."We have seen one aggressive deal in France, now two. They are a bad sign as they are setting a very loud precedent," a leveraged finance banker said. Investors are wary as the potential dangers of aggressive structures are particularly great in France because of its borrower-friendly restructuring laws. The situation can be difficult for investors if French companies default on their debt, as shown recently by retailer Vivarte, which has seen its loans plummet to deeply distressed levels after announcing it would hold off making any debt repayments. In contrast to paper from other European countries, secondary prices of French loans have fallen in recent months. Last summer, French, German and UK loans were all trading around the same level but since then German loans have risen about eight points and UK loans about two points, while French loans have fallen 0.5 points, according to Thomson Reuters data.

COVENANT-LOOSE

Banks are lining up about 2.65 billion euros of debt financing for private equity firm Dering Capital to buy TDF. BNP Paribas, Citigroup, Credit Suisse and Goldman Sachs are leading the deal and a second tier of banks made up of Deutsche Bank, HSBC, RBS and Societe Generale has been appointed. The covenant-loose facility will include senior loans of about 1.4 billion euros and subordinated debt. The aim is to retain as many existing investors in the deal as possible by allowing a cashless roll, to optimise liquidity. Total leverage will be 7.25, while senior leverage will be around 5.75. The borrower is seeking to include a mechanism more typical of an infrastructure and project finance loan to allow shareholders to take dividends out of the company without having to deleverage. It is likely that total leverage will be able to remain at 6.75.

On Ceva Sante, investors initially said they would need to be compensated for an aggressive structure on its 850m covenant-lite buyout financing, though pricing is expected to come in around 325bp-350bp with a 1 percent floor. Until the technical conditions plaguing Europe's leveraged loan market dissipate, cash-rich, deal-starved investors have little choice but to grin and bear it as French deals make up a major component of the deal pipeline."As much as the investor base say they are disciplined, if there are not many deals in the market then opportunistic issues can happen - and be successful," a senior European investor said. A second investor added: "People are seeing all sorts of things getting done and borrowers are taking a view that investors are desperate enough to invest and will not mind about things they previously did. Investors have to be pretty brave." ($1 = 0.7240 euros)

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