RLPC-Asia Pac lending up 27 pct to $279 bln year-to-date
* Record year-to-date volume in China and Hong Kong
* Indonesia and India active as companies borrow offshore
* Positive outlook for North Asia
By Jacqueline Poh
LONDON, Sept 30 (Reuters) - Asia Pacific syndicated loan volume excluding Japan of $90.4 billion in the third quarter pushed lending to $279 billion in the first nine months of 2013, 27 percent higher than the same time last year, despite a weaker macroeconomic picture.
The third quarter was clouded by liquidity concerns linked to the possible ending of the US Federal Reserve Bank's tapering programme and concern over India and Indonesia's weakening economies.
Loan volume was however supported by multibillion dollar loans for acquisitive Chinese companies and borrowing in China and Hong Kong set records for the first nine months of the year, according to Thomson Reuters LPC data.
Asia's loan market also benefitted from bond market volatility in June, as loans became more attractive and competitive against bonds again, reversing the recent trend of Asian companies favouring bonds over loans.
"With more attractive pricing and longer tenors, the loan market has become relatively more attractive to borrowers compared to the bond market," said Phil Lipton, HSBC's managing director of syndicated finance.
Loan pricing has dropped sharply in Hong Kong and tenors have stretched, prompting blue-chip borrowers including Henderson Land Development Co and Sun Hung Kai Properties to return to the market in the third quarter.
Syndicated loan volume in Hong Kong and China has already exceeded 2012 with three months to go before year end. Volume of $62.8 billion in China and $58.1 billion in Hong Kong for the year to date is 50.6 percent and 75.5 percent higher respectively.
China and Hong Kong contributed a combined 44 percent of Asia Pacific's total volume, supported by multibillion mergers and acquisitions loans for Chinese companies' international acquisitions and domestic infrastructure development projects.
These include three 15-year financings totalling Rmb16 billion ($2.6 billion) for metro lines in Guangzhou province and a Rmb12 billion ($1.96 billion) 30-year term loan for five highways in Xinjiang province.
Chinese companies also pushed Hong Kong borrowing to record levels by borrowing offshore to take advantage of cheaper interest rates and abundant bank liquidity. More than 60 percent of Hong Kong totaling more than $35 billion were raised by mainland Chinese companies in the first nine months.
These include an $8 billion refinancing in July for Chinese e-commerce giant Alibaba Group and a $4 billion acquisition loan backing pork producer Shuanghui International Holdings Ltd's bid for US-based Smithfield Foods .
Chinese offshore oil and gas firm China National Offshore Oil Corp Ltd (CNOOC) has also raised $9 billion in two separate deals this year.
"Chinese companies will continue to come to Hong Kong to gain access to more structured (loan) solutions," said Atul Sodhi, managing director at Credit Agricole CIB and chairman of the Asia Pacific Loan Market Association (APLMA)
Japan, which is Asia's largest loan market but has a more domestic focus, was slower with $223.2 billion of volume in the first nine months, 11 percent lower than $251.3 billion in the same period of 2012.
Australia, which is usually Asia's most active market, saw a relatively small drop 4 percent drop in volume in the first three quarters of 2013 to $50.5 billion, compared to the same time last year. INDIA, INDONESIA ON WATCH
Indonesia and India have been areas of concern as a weaker macroeconomic picture put pressure on their currencies, but the syndicated loan markets of both countries have been active as as companies seek offshore loans.
Indonesian loan volume doubled to $8.35 billion in the first nine months from the same time last year, despite the country's domestic currency woes.
Indonesian companies are seeking to raise offshore loans from international banks as domestic banks try to clamp down on domestic lending and Indonesia's central bank tries to boost its reserve ratios.
"Higher interest rates on domestic currencies will only push companies to borrow offshore to get cheaper funds," said Sodhi.
Several Indonesian loans have launched in the market since the currency crisis started in August, and there is more than $3 billion of loans in process.
India has also seen a wave of offshore borrowing, particularly from state-owned companies, after a more severe currency depreciation pushed the rupee to record lows in late August.
Offshore borrowing by Indian companies of $12.2 billion in the first nine months of 2013 is roughly flat on $12.57 billion last year but more than $5 billion of loans in the market is expected to push volume past $17.3 billion in 2012.
Loan bankers are wondering whether the loan market will be able to absorb the surge in Indian borrowing as banks' credit committees become increasingly wary of Indian risk. Some bankers are predicting that lndian loan pricing will have to rise.
"It may be more challenging for lower rated names to attract overseas interest at prevailing pricing due to the negative macroeconomic news coming out of India. There is a likelihood of a price correction if deals struggle in the market," said HSBC's Lipton.
The rush for dollar loans by Indian companies has already caused a rise in pricing as investors adopted a 'wait and see' attitude, a senior banker said.
Low default rates mean that banks are less worried about losing money in India than Indonesia. Stronger companies are expected to be able to syndicate loans successfully and any increase in pricing is expected to be reserved for lower-rated Indian companies.
"Default cases are rare in India and the last one was more than 10 years ago," said John Corrin, ANZ's global head of loan syndications.
(Editing by Tessa Walsh)
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