* China and Hong Kong set new loan volume records
* North Asia lending of $244 bln 66 percent higher than 2012
* M&A lending up 63 percent to $46 bln
By Jacqueline Poh
HONG KONG, Dec 31 (Reuters Basis Point) - Syndicated lending in Asia Pacific (excluding Japan) hit a record high of $462 billion in 2013, showing an increase of 51 percent on $307 billion in 2012, as demand from Chinese companies doubled, according to Thomson Reuters LPC data.
Chinese loan volume soared $117 billion, up 99 percent on a year earlier, as China’s companies and provincial governments borrowed heavily to finance acquisitions and infrastructure.
Hong Kong also set a new record of $80 billion in 2013, with an 86 percent increase on 2012. Nearly 70 percent of Hong Kong loans were for mainland Chinese companies, which moved offshore to raise cheaper foreign currency ofloans after government regulations curbed onshore US dollar lending in May.
Strong growth in China and Hong Kong boosted North Asia lending to $244 billion, up 66 percent on $147 billion in 2012.
Southeast Asia’s loan markets shrugged off macroeconomic weakness and currency depreciation in India and Indonesia and volume rose 51 percent to $80 billion from $52.6 billion in 2012. Malaysia, Philippines and Thailand also set new loan volume records.
Asia saw more jumbo multibillion dollar loans in 2013 and average loan sizes of roughly $400 million were 20 percent bigger than in 2012.
The biggest loan of the year was a 1.98 trillion yen loan for Japanese wireless carrier SoftBank Corp in September, which refinanced a one-year bridge loan from December 2012 that backed SoftBank’s $21.6 billion acquisition of US-based telecom Sprint Corp.
Japan was Asia’s biggest loan market in 2013 with volume of $276 billion, but lending dipped 15 percent from $324.5 billion in the previous 12 months due to reduced levels of merger and acquisition (M&A) activity.
Other jumbo Asian loans included an $8 billion refinancing for Chinese e-commerce company Alibaba Group and a $6 billion bridge loan backing Thai convenience store operator CP All Pcl’s takeover of Siam Makro Pcl.
“It is not every year that we see $8 billion or $6 billion deal sizes, but $2 billion or $3 billion is normal all of a sudden,” said Aditya Agarwal, head of loan syndicate for Asia Pacific at Royal Bank of Scotland. M&A INCREASING Excluding Japan, M&A activity in Asia Pacific rose 63 percent to $46 billion in 2013 from a year earlier. Hong Kong was especially busy with 37 percent of acquisition loans backing Chinese firms’ overseas expansion.
China National Offshore Oil Corp raised $9 billion in two separate loans backing Australian and Canadian acquisitions, and pork producer Shuanghui International Holdings Ltd took a $4 billion acquisition loan to buy Smithfield Foods of the US.
Leveraged loans backing private equity buyouts climbed 20 percent to around $8.5 billion from $7 billion in 2012. Deals included a $1.075 billion loan backing the $3.7 billion buyout of US-listed Chinese display advertising company Focus Media Holding Ltd, which is the largest leveraged buyout of a Chinese company to date and more are expected.
“The success of recent LBO financings will encourage private equity sponsors to tap the loan market,” said Ashish Sharma, head of Asia Pacific loan syndication at Credit Suisse.
M&A activity pushed Singapore volume 21 percent higher to $40 billion in 2013 from $33 billion a year earlier due to a S$9.3 billion ($7.4 billion) loan backing Thai Charoen Corp Group’s takeover of beverage maker Fraser & Neave Ltd and annual refinancings for commodities companies.
Despite Indonesia’s macroeconomic problems, Indonesian companies raised $12.7 billion of offshore syndicated loans, the second highest volume recorded, and 140 percent higher than $5.3 billion in 2012.
“We have seen deals on all fronts in Indonesia, from different sectors and priced from 150bp to 650bp,” said Bryan Liew, Standard Chartered Bank’s regional head of syndications for Southeast Asia.
Australian lending picked up in the last six months and volume of $100 billion was 25 percent higher than $80 billion in 2012. Australian companies also raised around $10 billion of loans in the US institutional loan market which offered more flexible longer-term loans than Australian banks. (Reporting by Jacqueline Poh, editing by Tessa Walsh)