NAB predicts continued growth in syndicated loan market in 2011

12 April 2011

Australian companies have upped the ante in the corporate loan market during the first quarter of 2011 with a near 150%1 increase in loan volumes to US$16 billion, a significant increase in issuance in comparison to this time last year.

Mark Garrick, Managing Director, Global Head of Loan Syndications, NAB, commented that the Australian syndicated loan market is gaining momentum as loan underwriting activity increases.

“As the figures suggest, we’ve seen more companies refinance this year and in particular an increase in event-driven financing as companies become more confident that the market will support them.

“Approximately A$60-80 billion needs to be refinanced this year before any allowance is made for acquisition driven funding,” Mr Garrick said.

Merger and acquisition (M&A) activity has started to pick up, evidenced by the recent acquisition of South East Asian online recruitment company JobsDB Inc by SEEK Asia, as subsidiary of SEEK Limited (SEEK). NAB acted as sole Lead Arranger, Underwriter and Bookrunner for an A$340m Syndicated Loan Facility to assist with the acquisition which was significantly oversubscribed.

For the first quarter of 2011, acquisition loan volume reached US$6.7 billion or 43% of total Australian loan volume, up significantly from only US$879 million in Q1 20102.

“Australian acquisition loan funding reflected 77% of total Asia Pacific acquisition loan funding in the first quarter which shows just how active M&A has been in Australia. In fact, NAB ranked second in the global loan underwriting league tables for the first quarter, behind JP Morgan but ahead of Bank of America,3” Mr Garrick said.

Mr Garrick said that pricing is currently 10-20 basis points tighter since the end of last year as companies are benefiting from increased liquidity both domestically and offshore.

“Many companies are moving towards Asia as liquidity and pricing remain big draw cards. We’re linking our domestic customers with Asian investors as we expect Asian participation in the syndicated loan market to grow steadily over the next five years,” Mr Garrick said.

NAB recently successfully closed the syndication of Origin Energy Limited’s (Origin) A$2.15 billion and US$0.35 billion 3 and 5 year Syndicated Loan Facility alongside ANZ and other lenders. NAB and ANZ underwrote the Facility to assist the funding of Origin’s acquisition of the NSW Government-owned retail businesses of Integral Energy and Country Energy and Eraring Energy GenTrader arrangements.

The Origin loan facility was significantly oversubscribed from the initial launch volume of A$2 billion which allowed Origin to upsize the facility to A$2.5 billion.

“This follows on from last year when Origin Energy also successfully raised A$2.5 billion in 3 and 5 year tranches targeting Asian investors.

“By any standard A$5 billion is a vast sum of money to raise in just over a year from any one market and clearly demonstrates the liquidity available in the Asian Pacific syndicated loan market,” said Mr Garrick.

NAB is ranked number one in the Australian bookrunner tables for syndicated loans for the first calendar quarter of 2011 by Dealogic4 and Bloomberg5. NAB has also been awarded second place in the Global Underwritten tables by Dealogic for the first calendar quarter of 2011.

Media contact
Elisha Vincent
M: +61 (0) 429 566 676

  1. Asia Pacific Syndicated Loans, Bloomberg Q1 2011 League Tables
  2. Dealogic Asia Pacific (ex Japan) Review First Quarter 2011
  3. Dealogic Global Underwriter Ranking First Quarter 2011
  4. Dealogic Loans Review, First Quarter 2011
  5. Asia Pacific Syndicated Loans, Bloomberg Q1 2011 League Tables