Top companies seen meeting refinance needs
A serious credit crunch in Hong Kong is unlikely and quality corporate borrowers would be able to meet their refinancing needs, bankers said yesterday.
Stanley Wong Yuen-fai, an executive director at ICBC (Asia), said the banking system in Hong Kong was still healthy although some banks had seen their capital shrink slightly amid the global financial turmoil.
'The syndicated loans due this year only account for about 3 per cent of the total outstanding loans, so the pressure [to provide refinancing] is not too large,' Mr Wong said.
He expected local and mainland lenders could still absorb much of the shortfall even though some foreign banks had cut back on lending.
Joseph Yam Chi-kwong, the chief executive of the Hong Kong Monetary Authority, warned earlier that syndicated loans worth more than HK$100 billion are set to mature this year and the government may need to help companies that have difficulty refinancing.
A lender at one Asian bank agreed that credit tightening would continue but a crunch was unlikely if the market environment did not deteriorate further.
He expected most companies with healthy financial fundamentals and business could still obtain funding from banks, adding that not all companies would need to refinance or seek new funds.
A report in a Chinese newspaper yesterday suggested Hutchison Whampoa could have refinancing needs of HK$32.5 billion this year.
However, a Hutchison spokesman said the company had no such need.
A US banker said companies had other ways to obtain funding and did not have to rely purely on syndication loans. For example, electricity supplier CLP Power successfully placed bonds last month.
Another lender at a European bank also expected corporates with good credit quality could still obtain funding from banks but would have to pay more to get it.
Borrowing spreads are 1 to 1.5 per cent higher for corporate lending compared with last year.
However, he expected most corporates could bear the cost since the interbank rates, a benchmark for pricing loans, declined dramatically last year.
He said some 'marginal companies' with weaker credit quality and cash flow management might have difficulty refinancing.
Small and medium-sized enterprises would not be affected too much even though banks' lending capacity had been reduced in the syndicated loan market, he said.
Mr Wong said banks had to diversify their lending and the interest rate for SME loans was higher than syndicated loans, so banks were still willing to provide such funding if the credit risk was acceptable.
