Shanghai Industrial Holdings is in talks with banks to arrange a syndicated loan of US$100 million to $150 million to pave the way for more acquisitions, banking sources said yesterday. The three-year loan is likely to fetch an all-in price 165 to 175 basis points over the London interbank offered rate (Libor). This is slightly higher than the 145 basis points over Libor paid by fellow red chip Beijing Enterprises (Holdings) on its $165 million syndicated loan closed in September. A higher borrowing cost reflects market concerns over financial strength and the availability of government support for mainland-backed companies following the closure last month of Guangdong International Trust and Investment Corp (Gitic). Analysts said red chips were eager to raise cash through equity and debt markets for future acquisitions, which in some cases might help relieve pressure on their highly geared parents. Bankers are closely watching the outcome of a $200 million syndicated loan for mainland shipping giant Cosco. The loan, to be launched this Friday, is expected to provide clues to investor appetite for mainland lending following Gitic's demise.
