SHANGRI-LA Asia's first foray into the syndicated loan market has met with good response, pushing the amount raised up from the initial US$300 million to $400 million. The five-year unsecured loan was co-arranged by HSBC Capital and Societe Generale Asia, with 17 major international banks in the underwriting group. The loan marked a departure from Shangri-La Asia's traditional funding means - primarily direct project financing. The hotel group's last fund-raising exercise was in December, 1993, when it issued convertible bonds, soaking up $217 million, to fund the purchase and development of 14 projects in China. Interest margin on the latest loan is 70 basis points above Libor (London interbank offered rate) for the first three years and 75 basis points for the remaining two years. A put option is attached and comes into effect at the end of the third year, allowing the lenders to recall the loan. Shangri-La Asia managing director Paul Bush said the cost of the loan was much cheaper than it would have been through traditional channels which usually were priced at 1 to 2 per cent over Libor. The tight pricing can be attributed to the low gearing of the group, about 11 per cent before the loan. Taking into account the syndicated loan, the ratio will become 20 per cent. Proceeds will be used for the acquisition of assets. 'Opportunities will be particularly watched to further the group's hotel development in Hong Kong and to expand the group's interest in China,' Mr Bush said. The hotel group's controlling shareholder, Kerry Holdings, raised $400 million last December through an unsecured syndicated loan.