RLPC-Glencore shows foreign firms tapping Asian loan buyers

* European companies target Asian bank liquidity

* $3 bln of loans raised for foreign firms so far

* Asia’s banks remain hungry for assets

By David Lau

LONDON, April 16 (BestGrowthStock) – European companies such as Swiss commodities
firm Glencore International AG are raising large chunks of syndicated loans in
Asia to take advantage of plentiful bank liquidity and diversify their lender

Glencore [GLEN.UL] held roadshows for its $7 billion loan refinancing in
Singapore, Taipei and Hong Kong this week as it seeks to place $1 billion of the
loan with new Asian investors.

Companies are tapping liquidity further afield in global syndications beyond
their home regions to diversify their relationship banks after recent economic

Non-Asian companies have already raised more than $3 billion of loans in
Asia this year, which is already fast-approaching the $3.87 billion of loans
raised for foreign borrowers in 2009, according to Thomson Reuters LPC data.

Another $2 billion of loans for foreign firms are in the pipeline, bringing
the total to nearly $5 billion at the start of the second quarter.

Asian fundraising has been seen for European commodities companies and
Australian firms so far, but the success of these deals is expected to encourage
more borrowers to reach out for Asia’s abundant liquidity.

“We are cautiously optimistic that liquidity will continue to flow from East
to West. For issuers looking for the last euro or dollar, getting the Asian bid
is important,” a London-based head of loan syndicate at a European bank said.


Asian banks were more liquid than their U.S. and European counterparts in
the aftermath of the credit crunch. The situation has rebalanced as Western
banks’ rebuilt capital in 2009, but Asian lenders remain hungry for assets.

Lending was steady in Asia in the first quarter with volume of $40 billion
roughly level with the first three months of 2009, but fewer loans have seen
demand outstrip supply.

Many recent Asian loans were completed on a club basis without a wider
syndication to get more favourable pricing. This has cut many would-be lenders
who are eager to lend — particularly Taiwanese banks — out of the picture.

Increased demand from Asian loan investors has been compounded by aggressive
budgets as the unexpectedly strong economic recovery gave banks higher targets
to meet in 2010.

“We have the pressure to book assets as our budget target has not yet been
achieved,” said a Taipei-based banker at a Taiwanese lender.

Higher pricing for European assets is also making loans attractive to Asian
investors, but is tempering European appetite for Asian loans.

The $8.5 billion loan backing Bharti Airtel’s (BRTI.BO: ) purchase of Zain
Group’s (ZAIN.KW: ) African cellular assets was priced at 140-195 basis points
(bps) with a blended margin of 176.5bps — lower than expectations of 200-250
bps — and was largely syndicated in Asia as a result.

Asia’s loan market is not accessible to all European companies as
non-domestic borrowers tapping into the region need a strong credit story and
Asian angle to entice lenders, a Hong Kong-based head of syndications at a
European bank said.


European commodity companies with global trade flows are well-suited to
Asian fundraising, often routing through Singapore subsidiaries to get around
Asian banks’ withholding tax issues, London-based bankers said.

More than 30 banks turned up for Glencore International’s roadshow in
Singapore this week, 20 in Taipei and 10-15 lenders attended in Hong Kong,
banking sources said.

Australian companies are also targeting Asian liquidity. Utility Origin
Energy Ltd (ORG.AX: ) was the most recent borrower to complete an increased
A$2.52bn-equivalent revolving credit.

Twenty-five of Origin Energy’s 41 lenders were Asian banks, underscoring the
key role that Asian investors are playing in financing Australian companies.

Oil trader Gunvor International BV is expected to make its Asian loan market
debut in May after a non-deal roadshow in March familiarised potential Asian
lenders with the company, and oil trader Vitol is refinancing a $1 billion Asian
(Reporting by David Lau, additional reporting by Tessa Walsh ; Editing by
Rupert Winchester)

RLPC-Glencore shows foreign firms tapping Asian loan buyers