RLPC-EMEA syndicated lending halves at end Q3

By Tessa Walsh and Sadaf Khan

LONDON, Sept 25 (Reuters) - Lending to companies in Europe,
the Middle East and Africa continues to show a sharp slowdown
with volume of $630 billion for the year to date, down 49
percent on the same period of 2007, according to Reuters Loan
Pricing Corporation.

In a quarter that will be remembered for turmoil in the
financial sector, third quarter volume of $127 billion fell 70
percent from the $422 billion seen in the third quarter of 2007
when the credit crunch was in its infancy.

Lehman's collapse at the end of the quarter exacerbated the
trends that had already been playing out in European lending, as
banks funding costs spiked higher again and liquidity diminished
further with enforced bank consolidation.

The volatility that followed Lehman's collapse pushed
average secondary prices past mid-February's previous low to new
record lows of 84.6 at the end of September, which threatens the
supply of new leveraged loans.

The fall of Lehman paralysed the loan market and delayed the
push to syndicate the jumbo M&A deals in the market and derisk
banks' balance sheets before the end of the year.

These loans include a $45 billion loan for Belgian brewer
InBev INTB.BR which backs its acquisition of Anheuser-Busch
(BUD.N) that is in general syndication but has yet to close.

A 16.1 billion euro loan backing German bearings
manufacturer Schaeffler's acqusition of Continental AG (CONG.DE)
also remains in syndication along with a 19 billion euro loan
backing Gas Natural's (GAS.MC) acquisition of a majority stake
in Union Fenosa (UNF.MC).

With so many large deals still in the market, lending to
investment-grade companies hit an all-time low of $62.9 billion
in the third quarter, and year to date volume is 58 percent down
on the first three quarters of 2007.

Falling equity valuations continued to make acquisitions
attractive and produced an additional $23 billion of M&A lending
in the third quarter, $12 billion of which supported blue-chip
acquisitions. Year-to-date M&A volume of $225 billion is 64
percent down on 2007.

Outside the M&A arena refinancing activity all but stopped
as investment grade companies stayed away from the market after
a three-fold rise in pricing, according to RLPC data.

The largest loan of the quarter was the $6 billion loan for
the Investment Corporation of Dubai. Reflecting changes in
global capital flows, three of the third quarter's ten largest
deals were for Russian and Middle Eastern companies.

Russian and Middle Eastern borrowers have had a strong year
with volume of $48.9 billion and $91 billion respectively.

Borrowing conditions, however, deteriorated towards the end
of quarter as the Russian stock market closed and the UAE's
central bank set up a 50 billion dirhams emergency facility to
ease tensions in the banking sector.

Liquidity remains limited in all areas of the loan market
and is diminishing further as a result of the consolidation that
is changing the lending landscape and slowing the market's drive
to sell down the jumbo loans.

Lehman was the European loan market's 18th most active
bookrunner in 2008 with a two percent market share after leading
M&A loans for Imperial Tobacco (IMT.L) and Carlsberg (CARLb.CO).

The end of the third quarter also saw the sale of Merrill
Lynch to Bank of America, Lloyds TSB's purchase of HBoS, and
Barclays and Nomura's purchases of Lehman's US business and
Asian and European investment banking businesses.

LEVERAGED LENDING PLUMMETS

European leveraged loans saw volume drop to 2004 levels with
only $20.8 billion of loans closing in the third quarter as
private equity firms struggled to get financing and deals such
as the sale of listed UK media company Informa (INF.L) fell
through.

Leveraged lending for the year to date totals $91 billion,
which is 71 percent below the $316 billion of leveraged loans
seen in the first three quarters of 2007.

The largest and most successful LBO of the quarter was the
$2.975 billion financing backing Nordic Capital and Avista
Capital Partners' $4.1 billion buyout of wound care company
ConvaTec, which also attracted support from US investors.
The quarter also saw the conclusion of the sell-down of some
of the biggest unsold leveraged loans. The aggressively priced
and structured deals were trapped in the pipeline by the credit
crunch, but were heavily discounted to sell.

Alliance Boots [AB.UL] sold a final 650 million pounds chunk
of its 9.02 billion pounds buyout financing at 92 percent of
face value in June and Dutch television company Endemol placed
1.5 billion euros of its 2.2 billion euros loan at 70 percent.

Reuters Loan Pricing Corporation's third-quarter EMEA
mandated bookrunner league table follows.

Rank/bank Volume ($) Deals Share (%)
1. Royal Bank of Scotland (RBS.L) $57,986,709,919 124 11.67
2. BNP Paribas (BNPP.PA) $46,838,187,287 157 9.42
3. Calyon $38,953,307,251 79 7.84
4. Barclays Bank (BARC.L) $25,880,851,730 59 5.21
5. Citigroup (C.N) $24,171,963,815 33 4.86
6. Deutsche Bank (DBKGn.DE) $21,798,081,845 32 4.39
7. Societe Generale (SOGN.PA) $20,747,253,248 63 4.17
8. ING (ING.AS) $19,362,865,212 72 3.90
9. JPMorgan (JPM.N) $17,200,999,857 20 3.46
10. HSBC (HSBA.L) $12,744,299,547 40 2.56

(Editing by David Cowell)