Syndicated loans climb to new highs in Asia

PUBLISHED : Wednesday, 04 January, 2012, 12:00am
UPDATED : Wednesday, 04 January, 2012, 12:00am


Syndicated loan volume in the Asia-Pacific region, including Hong Kong, was the highest on record last year as economic growth increased corporates' demand for loans.

Bankers, however, predict loan amounts to drop this year as the euro-zone debt crisis slows economic growth and bank lending.

Syndicated loans, or loans pooled by a group of lenders for a single borrower, made in the Asia-Pacific region excluding Japan reached US$342 billion, with 1,082 deals last year, up 27 per cent from 2010's US$268.5 billion through 943 deals.

Last year's figure beat the earlier record of US$288.4 billion in 2007, before the global financial crisis, when the loan amount dropped as the credit market froze.

Andrew Fung Hau-chung, executive director and head of treasury and investment at Hang Seng Bank, said the record high lendings in the region as a whole were due to solid economic growth as China, India, Indonesia and South Korea surged ahead.

'The economic growth in many countries in the region last year was good. This led to an increase in demand for companies to raise syndicated loans to finance their development,' Fung said.

Hong Kong saw a record high US$46.4 billion of syndicated loans last year, beating its 2010 record of US$40.3 billion. Singapore also hit a record of US$40.8 billion, beating its previous high point of US$33 billion from 2008.

Fung said the increases were the result of tighter credit control in India and China, aimed at tackling inflation. 'As companies in China and India could not raise funds in their domestic markets, they came to international financial centres such as Hong Kong and Singapore for syndicated loans,' he said.

India's offshore loans stood at US$24.1 billion last year, up 9.5 per cent from 2010. Meanwhile India's domestic rupee loan volume dropped 16 per cent from 2010 to US$55.7 billion.

Loans in Taiwan last year dropped to US$41.2 billion, down from US$55.3 billion in 2010, and on the mainland rose to US$27.8 billion, from US$22 billion in 2010.

Syndicated loans made in Australia stood at US$108.6 billion last year, up 70 per cent from 2010. That was the second-highest on record after US$110.5 billion in 2007.

Looking ahead, Fung said that he believed the syndicated loans market would decline as many European banks would scale down their lending.


The amount, in US dollars, of syndicated loans recorded in Hong Kong last year, up by US$6.1 billion over 2010's figure