aplma news - sc lowy news issue no. 55 winter ... project finance michael thorpe commonwealth bank...
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APLMA NewsIssue No. 55 Winter 2014
Follow the latest updates and information at https://www.aplma.com
Features
Contents:
Page
APLMA Events Calendar 2015 5
APLMA Indonesian Loan
Market Seminar 8
APLMA Indian Loan
Market Conference 10
Member News 12
APLMA Singapore Christmas Party 14
APLMA WILMA Series: Diversity in the
Workplace 16
APLMA WILMA Christmas lunch talk 17
APLMA Hong Kong Young Leaders
Christmas Party 21
APLMA Secondary Loan
Market Seminar 22
APLMA Asia Pacifi c Syndicated Loan
Market Outlook Roundtable 30
APLMA Philippines Loan Market
Conference 38
APLMA Hong Kong Christmas Party 44
LMA members’ survey 46
Dealogic Asia Pacifi c market wrapPage 3
Outlook for the secondary marketPage 23
Syndicated Lending in Taiwan: opportunity amidst challengesPage 28
A Word from the Managing Director
Happy New YearThe APLMA ended 2014 on a high note. It was a full and active year with
over 80 events and a record 258 members. Our Documentation and Agency
Committees rolled out multiple new and revised documents as well as
guidance notes which are all now available on the APLMA web site. We also
launched our new web site with a host of new and improved features. The
APLMA would like to thank its Board, ExCo and Committee members for
helping to make 2014 our best year ever.
Membership Renewals 2014As we continue to increase the number of events and roll out new documentation, membership of the APLMA
is of even greater benefi t to members, and we hope that all members will renew their subscriptions so that
we can continue to represent the loan market.
Membership fees were due on 1 January, 2015. So please ensure that you pay your membership dues
on time. For enquiries, please contact: [email protected].
APLMA Awards / Global Loan Market SummitVoting for the APLMA Awards closes on 15 January. Winners will be announced at the 4th APLMA Awards
Dinner on 3 February, 2015. There are only a few tables left so please book early to avoid disappointment.
For reservations, please contact: [email protected]. The 4th Annual Global Loan Market Summit will
be held in association with the LMA and the LSTA on 3-4 February, 2015.
Finally, the APLMA would like to take this opportunity to wish all members a very Happy and Prosperous
2015.
Janet FieldManaging Director
Janet Field
Asia Pacifi c loan market –outlook for 2015Page 32
Banks & Borrowers review opportunities in the PhilippinesPage 40
02Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
ASIA PACIFIC LOAN MARKET ASSOCIATIONExecutive Offi cersChairman Atul Sodhi Crédit Agricole CIB
Vice Chairman Phil Lipton HSBC
Treasurer & Secretary Les Collett Willis Financial Solutions
Honorary Secretary Boey Yin Chong DBS Bank
Branch Offi cersAustraliaChairman Sean Sykes Commonwealth Bank of Australia
Vice Chairman Stephen Boyd National Australia Bank
Treasurer Andrew Ting National Australia Bank
SingaporeChairman Aditya Agarwal The Royal Bank of Scotland
CommitteesHong Kong ChairDocumentation Pius Chong HSBC
Agency Donny Lam Citi
Market Practices John Corrin ANZ
Secondary Loan Trading Kate Kwan JP Morgan
Leveraged Finance Rupert Manduke-Curtis Mizuho Bank Ltd
China Pedro Cheung Bank of China (Hong Kong) Ltd
WILMA Sandra Pemberton National Australia Bank
Young Leaders Nancy Wang ANZ
Awards Atul Sodhi Crédit Agricole CIB
Australia
Management Sean Sykes Commonwealth Bank of Australia
Documentation & Legal Issues Kerryn Smith National Australia Bank
Project Finance Michael Thorpe Commonwealth Bank of Australia
Young Leaders Bianca Cogan ANZ
Singapore
Management Aditya Agarwal The Royal Bank of Scotland
Project Finance Neil McDonald JP Morgan
Documentation Rich English Barclays
Overseas
Shanghai Kevin Ye HSBC
Taiwan Eric Lin Mizuho Bank Ltd
India Aakash Desai Standard Chartered Bank
Malaysia Nor Masliza Sulaiman CIMB Bank Berhad
New Zealand Phillip McGivern Westpac Banking Corp
StaffName Job Title Telephone No. / Email AddressJanet Field Managing Director (852) 2826-3500 / janet.fi [email protected]
Gary Knight Director (852) 2826-2494 / [email protected]
Katy Chan Director (852) 2826 2462 / [email protected]
Ada Pun Consultant (852) 2826-3472 / [email protected]
Ivy Lui Associate Director (852) 2826-2496 / [email protected]
Kit Chui Manager (852) 2825-8986 / [email protected]
Anna Cowley Manager (Australia) (61) 414 324 857 / [email protected]
Maggie Tam Executive Assistant (852) 2825-8820 / [email protected]
Contact DetailsAPLMA32/F, Jardine House Facsimile: (852) 2825-8800One Connaught Place Website: https://www.aplma.com Central, Hong Kong
03Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Asia Pacifi c Syndicated Loans Market Wrap – Full Year 2014
• Asia Pacifi c loan volume totaled $779.0bn in 2014, on level with record high volume set in 2013 ($779.0bn)
• Real Estate was the leading sector for Asia Pacifi c loan volume with a record $100.2bn lent in 2014 and up 32% year-on-year. Volume was driven by Westfi eld Group and Westfi eld Corp’s $12.7bn facility inked on March 2014 in what stands as the biggest loan in the Real Estate sector on record and the also the largest loan in the region in 2014
o Finance and Oil & Gas followed with a 7% and 13% increase during the same period to $81.9bn and $69.8bn, respectively
• Global syndicated loan volume totaled $4.60tr in 2014, the second highest level on record behind 2007 ($4.89tr), and up 6% on 2013 ($4.35tr). 4Q 2014 volume stood at $1.10tr, down 11% on 2013 ($1.22tr) to reach the third highest 4Q level on record
o Americas accounted for 55% of the global loan volume in 2014 with $2.53tr, narrowly surging past 2013’s volume ($2.51tr) to reach the highest level on record
o EMEA followed with $1.29tr and a 28% share of global volume, the highest level since 2007 and up 22% year-on-year ($1.06tr)
• Japan loan volume stood at $223.7bn in 2014, a 28% decline from the $311.1bn borrowed in 2013 and the lowest level since 2007 ($183.8bn). 4Q 2014 volume totaled $38.7bn, down 29% on $54.8bn in 4Q 2013 and the lowest 4Q level since 2007 ($34.1bn)
o B o r r o w e r s t a p p e d t h e U S D -denominated loan market for $10.9bn in 2014, down 32% on 2013 ($16.1bn) and the lowest volume since 2010 ($6.4bn)
• Japanese banks continued to dominate the Asia Pacific mandated lead arranger and bookrunner rankings* in 2014 - Mizuho led both the mandated lead arranger and bookrunner rankings, while Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group rounded off the top three rankings, respectively
• Asia Pacifi c (ex Japan) loan volume reached $555.3bn in 2014, up 19% on the $468.0bn in 2013 and the highest volume on record. Despite the increase, 4Q 2014 volume fell to $130.3bn, down 6% on 4Q 2013 ($138.0bn) but still the second highest 4Q total on record
• There were 115 $1bn+ loans signed in Asia Pacifi c (ex Japan) in 2014 for a combined total of $227.2bn, the fi rst time volume exceeded the $200bn barrier on record and up 41% year-on-year
• State Bank of India led both mandated lead arranger and bookrunner rankings* in Asia Pacifi c (ex Japan) in 2014, with shares of 8.3% and 11.6%, respectively
• On December 9th, Origin Energy signed a $6.1bn loan via a consortium of 11 bookrunners to amend and extend an existing facility signed in August 2013. The deal was also the biggest loan in Asia Pacifi c (ex Japan) in 4Q 2014
o Asia Pacifi c (ex Japan) Amend and Extend (A&E) Loan volume reached $29.8bn in 2014, more than triple the $8.6bn lent in the same 2013 period and the highest level on record
• Australia remained the top borrower of Asia Pacifi c (ex Japan) loans in 2014 with $133.7bn, up 13% year-on-year and the second highest annual volume on record behind 2008 ($135.3bn)
“Real estate was the leading sector for Asia Pacifi c loan Volume”
“Asia Pacifi c (ex Japan) loan volume reached $555.3bn in 2014”
04Asia Pacifi c Loan Market Association
APLMA News
Winter 201404Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
• Southeast Asian borrowers tapped the loan volume for a combined total of $119.5bn in 2014, up 38% on 2013 ($86.6bn) and the highest volume on record. Deal activity, however, dropped to 247 deals in 2014, down from 295 deals in 2013 and the fi rst year-on-year decrease since 2009 (168 deals)
o 2H 2014 volume of $59.1bn was up 49% compared to the same 2013 period ($39.7bn) and the highest 2H volume on record. Marina Bay Sands Ptd Ltd completed a $4.1bn loan facility in August 2014 in what is the largest facility completed in the region in 2H 2014
• Singapore loan volume totaled $60.6bn in 2014, surpassing the previous annual record set in 2011 ($36.7bn) and up 71% on the $35.5bn lent in 2013
• Asia Pacifi c (ex Japan) club loans reached $216.4bn in 2014, the highest annual volume on record and up 24% from $174.5bn in 2013. Average deal size reached the highest level on record with $461m
• Asia Pacific (ex Japan) Loans in Local Currencies reached $327.4bn in 2014, up 26% from $260.4bn in 2013 and the highest volume on record. HKD ($39.7bn), NZD ($20.0bn) and PHP ($1.2bn) denominated borrowing all reached new full year record highs
o Similarly, G3-currency denominated loans totaled $221.4bn in 2014, an increase of 8% on the 2013 ($205.8bn). Notably Euro-denominated loan volume was up for the second consecutive year to $7.8bn
• Asia Pacifi c (ex Japan) Acquisition-related loan** reached $73.2bn in 2014, the second highest volume on record behind 2007 ($101.4bn)
0
200
400
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800
1,000
1,200
1,400
1,600
1,800
2,000
0
100
200
300
400
500
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2007 2008 2009 2010 2011 2012 2013 2014
Deal Value $ (m) No.
* Please note that bookrunner market share is a proportion of bookrunner-led loan volume only** Includes acquisitions, future acquisitions, spin-offs and LBOs
“Asia Pacifi c (ex Japan) club loans reached $216.4bn”
05Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
APLMA Events Calendar 2015
Date Event Location
3 FebruaryAPLMA 4th Loan Market AwardsVenue: Hong Kong Convention & Exhibition Centre
Hong Kong
3-4 FebruaryGlobal Loan Market SumitVenue: Hong Kong Convention & Exhibition Centre
Hong Kong
10 FebruarySecondary Documentation Training SeminarVenue: CTBC Bank Ltd
Taipei
11 FebruaryIndonesian Regulatory UpdateVenue: PT Indonesia Infrastructure Finance
Jakarta
February Documentation Training Course Sydney
February Young Leaders Event Hong Kong
3 MarchLoan Documentation Training CourseVenue: Norton Rose Fulbright
Hong Kong
March Thailand Loan Market Seminar Bangkok
March Loan Documentation Training Course Singapore
March Dubai Loan Market Conference Dubai
March WILMA Event Hong Kong
22 April China Loan Market Conference Beijing
April Melbourne Annual Golf Day Melbourne
11-15 May Syndicated Loan Certifi cate Course Hong Kong
14 May Annual General Meeting Hong Kong
14 May Post-AGM Cocktail Reception Hong Kong
May Korean Loan Market Seminar Seoul
May Documentation Training Course Sydney
3-4 June 17th APLMA Annual APAC Syndicated Loan Market Conference Singapore
June Agency Seminar Hong Kong
July Documentation Training Course Melbourne
July Vietnam Loan Market Conference Hanoi
July Singapore Annual Golf Day Singapore
28 August Annual Golf Day Hong Kong
August Documentation Training Course Sydney
August Trivia Night Sydney
August Young Leaders Event Hong Kong
August Taiwan Loan Market Conference Taipei
September Malaysian Loan Market Conference Kuala Lumpur
September Melbourne Trivia Night Melbourne
September Project Finance Seminar Hong Kong
September Secondary Loan Market Seminar Hong Kong
September Oktoberfest Singapore
September WILMA Event Hong Kong
September Young Leaders Event Hong Kong
October Syndicated Loans Certifi cate CourseHong Kong / Singapore / Australia
APLMA 4th Loan Market Awards The APLMA 4th Loan Market Awards will be held on 3 February, 2015 at the Hong Kong Conven on and Exhibi on Centre, Hong Kong.
The APLMA Syndicated Loan Awards are the first Awards that could be deemed to be truly judged by the market, offering a level playing field for key market prac oners to have their deals recognised by their peers based on merit alone.
Vo ng will take place in December and January and we will be using the Bloomberg League Tables as an aide memoire. Detailed informa on is available on the APLMA website .
Special thanks to the Media Partner:
07Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Date Event Location
October Sydney Annual Golf Day Sydney
October Indian Loan Market Conference Mumbai
October Loan Documentation Training Course Hong Kong
October Loan Documentation Training Course Singapore
November Philippines Loan Market Seminar Manila
November Asia Pacifi c Syndicated Loan Market Outlook Roundtable Hong Kong
November Melbourne End of Year Networking Event Melbourne
November SEA Loan Market Seminar Singapore
November Young Leaders Event Hong Kong
November / December
Australian Branch Christmas Party Sydney / Melbourne
December Singapore Branch Christmas Party Singapore
December Hong Kong Branch Christmas Party Hong Kong
Full details of all APLMA events, including Programmes and online registration, can be found on the APLMA website (http://www.aplma.com), under the Events section on the homepage.
To Register Online:
– Log on to the APLMA website (www.aplma.com) with your login name and password;
– Select the event that you would like to attend;
– Click on ‘register’;
– Click on ‘submit’.
NB: If you do not receive an automatic “Registration Confi rmation” you need to re-register
CPT Points - Frequently Asked Questions
1. How do I get CPT points for attending an APLMA seminar or conference? The APLMA issues CPT certifi cates for many of its seminars and conferences. In order to be eligible for CPT points, Members
are required to comply with the following procedures:
i) Sign in:– A CPT attendee list in alphabetical order by company is available on the Registration Desk at all eligible APLMA events;
– Attendees who require CPT points are required to sign in against their name indicating their time of arrival;
ii) Attend the seminar / conference in full:– In order to be eligible for CPT points a Member is required to attend the seminar / conference for the full duration of
the event;
– Members who leave the event before the end or who have to leave early will NOT be eligible for CPT points.
iii) Sign out: – At the end of each seminar / conference, Members are required to sign out indicating their time of departure.
2. What if I forget to sign out?– Members who sign in but forget to sign out will NOT be eligible for CPT points;
– The APLMA regrets that CPT points cannot be issued to any members who forget to sign out. Please note that requests
for CPT points by Members who forget to sign out will be declined.
3. What if I have to leave early? Can I sign out before the conference ends?– Members who leave early will NOT be eligible for CPT points.
– The APLMA regrets that CPT points cannot be issued to any members who leave early. Please note that requests for CPT
points by Members who leave the event before the end will be declined.
08Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Ronny (Sponsor: ANZ)
Ari Soerono (Indonesia Infrastructure Finance)
Edimon Ginting (Asian Development Bank)
Janet Field (APLMA)
Birendra Baid (Deutsche Bank), Boey Yin Chong (DBS), Ashish Sharma (Credit Suisse), Carl Roberts (Sponsor: ANZ), David Sumual (PT Bank Central Asia)
APLMA Indonesian Loan Market SeminarOver 160 members attended the APLMA Indonesian Loan Market Seminar on 9 October, 2014. Speaker presentations are now available on the APLMA web site. Special thanks to sponsors: ANZ and Thomson Reuters.
Birendra Baid (Deutsche Bank), Boey Yin Chong (DBS), Ashish Sharma (Credit Suisse)
Ashish Sharma (Credit Suisse), Carl Roberts (Sponsor: ANZ), David Sumual (PT Bank Central Asia)
Over 160 members attended
09Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
John Corrin (Sponsor: ANZ), Hugeng Gozali (Astra Sedaya Finance), Ashish Saboo (CT Corpora)
Hugeng Gozali (Astra Sedaya Finance), Ashish Saboo (CT Corpora), Anne Patricia Sutanto (PT Pan Brothers Tbk), David Tendian (Adaro Group)
Janet Field (APLMA), Sevianto Nismara (CTBC), Kai Weng Yip (Maybank)
John Corrin (Sponsor: ANZ), Hugeng Gozali (Astra Sedaya Finance), Ashish Saboo (CT Corpora), Anne Patricia Sutanto (PT Pan Brothers Tbk), David Tendian (Adaro Group)
Amerta Mardjono (Wells Fargo), Oswald Tambunan (Bank Negara Indonesia)
APLMA Indonesian Loan Market Seminar
Jessica Teo (Maybank), San Sany Hakim (Standard Chartered), May Ching Lim (Maybank), Kai Weng Yip (Maybank), Joy Li (Standard Chartered)
Donda Hutabarat (Indonesia Eximbank), Adam Hardani (Indonesia Eximbank), Wilsa Arini (Indonesia Eximbank), Mekar Maulina (Indonesia Eximbank)
Ashish Saboo (CT Corpora), Amit Khattar (Deutsche), Birendra Baid (Deutsche), Parag Ranade (VTB Capital)
10Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Rajeev Arora (State Bank of India)
Aditi Nayar (ICRA), Harsha Subramaniam (Sponsor: Bloomberg), Samiran Chakraborty (Standard Chartered)
Atul Sodhi (CACIB), Niraj Shah (ANZ), S M Sundaresan (Standard Chartered), Rahul Shukla (Citi), Brijesh Mehra (RBS)
Janet Field (APLMA)
S M Sundaresan (Standard Chartered), Rahul Shukla (Citi)
APLMA Indian Loan Market ConferenceOver 160 delegates attended the APLMA Indian Loan Market Conference on 29 October, 2014. Speaker presentations are now available on the APLMA web site. The conference focused on trends and opportunities in the Indian loan market. Special thanks to sponsors: Herbert Smith Freehills and Bloomberg.
Atul Sodhi (CACIB), Niraj Shah (ANZ)
Soumya Rao (Sponsor: Herbert Smith Freehills), Siddhartha Sivaramakrishnan (Sponsor: Herbert Smith Freehills), Alexander Aitken (Sponsor: Herbert Smith Freehills)
Nathan Nelson (EDC)
11Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Sanjay Ratra (Standard Chartered)
Yogesh Venkatachalam (ANZ), Aakash Desai (Standard Chartered), Birendra Baid (Deutsche)
Ashish Garg (Vedanta Resources), Vipul Chandra (Larssen & Toubro), Raghav Sud (Tata Steel), Sameer Chandra (Citi)
Aditya Agarwal (RBS), Yogesh Venkatachalam (ANZ), Aakash Desai (Standard Chartered), Birendra Baid (Deutsche), Pankaj Agarwal (DBS)
Vipul Chandra (Larssen & Toubro)
APLMA Indian Loan Market Conference
Vipul Chandra (Larssen & Toubro), Raghav Sud (Tata Steel)
Janet Field (APLMA), Veena Sivaramakrishnan (Juris Corp) Gaurav Shukla (Standard Chartered), Niloufer Lam (Amarchand & Mangaldas & Suresh A. Shroff & Co.), Sonali Mahapatra (Talwar Thakore & Associates)
12Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Member News
APLMA News
APLMA staff changes
The APLMA welcomed Maggie Tam on 3 November, 2014 as a new Executive Assistant – Events. Maggie joins
from Rococco and has many years experience of event organisation and hospitality. Maggie can be contacted
on: [email protected].
The APLMA is also pleased to announce the promotion of Ivy Lui to Associate Director and Kit Chui to Manager.
Membership renewals
Membership renewals for 2015 were due on 1 January, 2015, Renewal notices were sent to all members in
November.
If you have not yet renewed your APLMA membership please do so as soon as possible. Members who have
not yet renewed will not be able to access the APLMA web site for standard documentation and event
registration until their accounts have been settled. Please settle early to avoid disappointment.
New Members
The APLMA warmly welcomes the following new Members who recently joined:
• Chong Hing Bank Limited – Associate
• Hastings & Co – Associate
• Miller Insurance Services LLP – Associate
• Prudential Capital (Singapore) Pte Ltd – Associate
• ICRA Limited – Single Centre
• PT Indonesia Infrastructure Finance – Single Centre
Branch News
Australian Branch celebrates 15th anniversary
2014 was another busy year for the APLMA in Australia. We held over 20 events, courses and seminars for
our members, all of which have been tremendously supported.
Australian Branch celebrated its 15th anniversary which is a great achievement, refl ecting the collective efforts
of so many over this time. To commemorate our birthday, we set aside September for formal recognition of
this milestone, with two events which were great successes. The fi rst of these was the Borrower Update, at
which we had a panel of our lead syndicators provide their perspectives on the main trends in debt markets
and their thoughts on the outlook for the market. Within the attendance of over 200 people we also had over
60 representatives from our client base who attended to hear the perspectives of our panel and to enjoy a
relaxed cocktail party after.
The next night we held our 15 year birthday party at which approximately 300 members and partners attended to celebrate the
achievements of APLMA Australia. To have over 500 people attend these events was tremendously satisfying for our Branch and a
fi tting way to celebrate our milestone. I would like to thank everyone involved with organising our 15 year birthday events.
Australian committee news
Our Documentation Sub-Committee has had a very busy year and made great progress on updating the APLMA Australia standard
documentation. I would like to thank Kerryn Smith (Chairman) and his committee for all their efforts in progressing their agenda so
strongly over the year.
Sean Sykes
Maggie Tam
Ivy Lui
Kit Chui
13Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Our Young Leaders Sub-Committee has again had an outstanding year holding several events in Sydney and Melbourne. The level of
support from members for their events is particularly gratifying. I would like to offer special thanks to Bianca Cogan from ANZ who
has done a great job as Chair over the past year and also to all committee members as the number and quality of events they have
staged has been outstanding. Bianca will be passing the reigns to Grazia Zappia from CBA, to continue the great momentum our
Young Leaders have established. Congratulations to Bianca and Grazia.
Our Project Finance Sub-Committee has also maintained good momentum over the year with the PF Three Cities Seminar a particular
highlight. Thanks to Norm Heavener for his efforts as Chairman and also to the members of their committee.
Management Committee changes
I would also like to acknowledge two people who have been outstanding servants for the APLMA here in Australia and to the APLMA
generally. Firstly Wayne Green, Head of Loan Capital Markets Australia for BNP Paribas, a founding Director of APLMA Australia and
a past Chairman for four years will be moving to Hong Kong to take up a role as Head of Syndication, Asia for BNP Paribas. Wayne
has been a wonderful contributor to APLMA Australia over the last 15 years and we wish him all the very best with his move to Hong
Kong. Similarly Gavin Chappell from Westpac, is taking up a new role heading Structured Asset Finance for Westpac in Australia. Gavin
is also a long standing committee member of APLMA Australia and a Director of the APLMA and was a past Chairman for three years.
Gavin has been a great contributor also and on behalf of everyone I wish Gavin all the very best with his new role. A big thank you
from us to both Wayne and Gavin.
Year ahead
2015 will be another active year for the APLMA in Australia, with our usual number of high quality events, seminars and courses that
are always well supported by our members.
Finally I would like to thank all the members of Australian Branch Management Committee who continue to generously give their
time to serve the APLMA here in Australia. We are fortunate to have so many here who are such great advocates for our Association
and who freely contribute so willingly and positively to all of our events every year.
Wishing you all a great 2015.
Committee News
Australian Project Finance Committee
New chair
Norm Heavener, Head of Project Finance of Westpac, will be stepping down as
Chair of the Project Finance Committee in Australia in January. He will be
succeeded by Michael Thorpe, Managing Director, Project Finance of
Commonwealth Bank in January.
The APLMA would like to thank Norm for his enormous contributions to the
growth and development of this committee as the inaugural chairman. We look
forward to welcoming Michael as the new chair.
Hong Kong Documentation Committee
New documents
The Committee has completed the following new document templates which have been posted to the website
in Q4:
i) Mandate Letter for secured transactions (Hong Kong and English Law);
ii) Term Sheet for secured transactions (Hong Kong and English Law);
iii) Offshore RMB facility agreement (Hong Kong law). A user guide will be provided subsequently.
The Committee has also updated the Unsecured Mandate Letter and Unsecured Term Sheet (to include the
English law option in addition to Hong Kong law) and the APLMA Confi dentiality Letter (Hong Kong Law) for Primary Syndication
(Clean) to refect the change to the reference in the Companies Ordinance.
Norm Heavener Michael Thorpe
Pius Chong
14Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Aditya Shroff (Linklaters), Boey Yin Chong (DBS), Andrew Saw (Linklaters)
Over 120 members attended
Simon Lim (RBS), Sean Liu (UOB), Jesscia Teo (Maybank)
Aditya Agarwal (RBS)
Mike Williams (Westpac), Michael Downes (Babson Capital), Shane Forster (Babson Capital)
APLMA Singapore Christmas PartyOver 120 members attended the Singapore Branch Christmas Party on 27 November, 2014. This event provided an excellent opportunity to network.
Eugene Ooi (Allen & Gledhill LLP), Benny Cheong (Bank of Nova Scotia)
Lishi Fong (Norton Rose Fulbright), Andrew Koh (CCB) Atul Kawatra (Siemens Financial Services), Sujata Bhattacharjee (RBS)
15Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Documents in the pipeline
The Committee is currently working on the following documents which are targeted to be launched in early 2015:
i) Updated version of the Sample Asia Arbitration Clauses to take account of the changes to arbitration law in Hong Kong and China;
ii) Chinese translations of the Hong Kong Law Facility Agreement, Term Sheet and Confi dentiality Letter for primary syndication (NEW documents).
Update on FATCA
In January 2015, the APLMA released a FATCA Note for Agents operating in an IGA Model 2 jurisdiction (ie HK, Japan and Taiwan).
The note provides a sample provision which protects the Agent against any liability which might result from its failure to withhold on
account of FATCA which was caused by a Lender failing to provide accurate information about its FATCA status, or a US or FFI borrower
failing to correctly act on that information.
Agency Committee
Half day HIBOR fi xing
Due to the typhoon season, members have raised concerns about Agents’ duties in respect of the half Business
Day process, especially since the Hong Kong Banking Association is now also publishing HIBOR in the afternoon.
The half Business Day process has already been covered in the existing APLMA standard agreement. Unless
the Agent has obtained all parties’ approval to use the afternoon HIBOR, the APLMA standard agreement
states that the Agent shall obtain the rate from the Reference Banks if no HIBOR appears at 11:00 am Hong
Kong time. Also, as far as it is a Business Day and HKD clearing is working, whether it is a full or half day, the
payment must be settled as normal and if any party cannot arrange payment due to it being a half day, it
shall be treated as non-payment under the agreement. The APLMA will be issuing a new guideline on this in
early 2015.
Inaugural APLMA Agency Seminar
The APLMA will be hosting its fi rst Agency Seminar in 2015. Details will be posted on the APLMA web site in due course.
Shanghai Committee
New chair
Julia Wu of HSBC recently stepped down as Chair of the Shanghai
Committee and has been succeeded by Kevin Ye of HSBC as the
new Chair. The APLMA wishes to thank Julia for her contributions
to the growth and development of the APLMA’s activities in
China and warmly welcomes Kevin aboard.
Event programme
The APLMA Shanghai Committee met on 12 December. Katy Chan
(APLMA), Kevin Ye and members of the committee attended. The
members of the committee suggested preliminary topics and arrangements for the committee’s events and activities for 2015 including
strengthening relationships with local banking associations as a priority and conducting more documentation training on China specifi c
issues. The members also shared their preliminary ideas for the APLMA China Loan Conference.
New committee members
In the meantime, all members agreed to invite additional active market players (both foreign banks and Chinese banks) to join the
Committee so that the Committee can play a more important role in the China syndication community. Any Full members interested
in joining the committee should contact: [email protected].
Kevin Ye Shanghai Committee
Donny Lam
16Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Sophie Guerin (Community Business)
Angie Lau (Sponsor: Bloomberg)
Over 60 members attended
Janet Field (APLMA)
Janet Field (APLMA), Angie Lau (Sponsor: Bloomberg), Dorothy Chan (Sponsor: Bloomberg), Sophie Guerin (Community Business)
APLMA WILMA Series: Diversity in the WorkplaceOver 60 members attended the WILMA workshop on diversity in the workplace on 23 October, 2014. The speaker presentation is now available on the APLMA web site. Special thanks to venue sponsor: Bloomberg.
Lei Zhang (DBS), Katy Chan (APLMA), Janet Field (APLMA)
Katy O’Doherty (Simmons & Simmons), Louisa Ng (Simmons & Simmons)
Georgina Axon (Norton Rose Fulbright), Eleanor Miller (Norton Rose Fulbright)
17Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Over 50 members attended
Janice Gerber (City Style Image Consultants), Paloma Gerber
Martha Fernandez (BBVA) poses a question
Janet Field (APLMA)
Sandra Pemberton (NAB) gives a farewell speech
APLMA WILMA Christmas lunch talkOver 50 members attended the APLMA WILMA Christmas lunch talk on 25 November, 2014 and bid farewell to committee chair, Sandra Pemberton. The new chair will be announced at the next committee meeting.
Janice Gerber (City Style Image Consultants) presents a lucky draw prize to Catherine Lam (Bloomberg)
Kitty Leung (Bank of Nova Scotia), Sylvia Hung (ANZ), Cecily Fan (ANZ), Kate Kwan (JP Morgan)
Anita So (HSBC), Katrina Santos (HSBC)
18Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Malaysia Loan Market and Syndication 2014
The year on year growth of syndicated loan volume in Malaysia increased by 47.6%, with total volume of
USD18.40 billion in 2014 compared to USD12.47 billion in 2013. This volume growth is substantial when
benchmarked against the Malaysia year on year GDP growth of 5.6%-6.00%.
On the other hand, the number of deals completed decreased year on year. There were 29 completed deals in
2014 compared to 46 completed deals in 2013. This signifi es that larger transactions were accomplished in
2014 as compared to 2013.
Major deals concluded in 2014 include Sapura Kencana TMC Sdn Bhd (USD 5.5 billion), Battersea Phase 2 &
Phase 3 Holding Co Ltd (USD 2,176 million), Powertek Investment Holdings Sdn Bhd (USD 1,712 million), 1MDB
Energy Holdings Ltd (USD 975 million) and QSR Brands Bhd (USD 736 million).
WILMA
WILMA chair, Sandra Pemberton will be stepping down as committee in January to
take up a new role at National Australia Bank in Sydney.
The APLMA wishes to thank Sandra for her contributions to the committee and growing
the programme of WILMA events. Sandra’s successor will be announced at the next
committee meeting.
Secondary Loan Trading Committee
Events
The Secondary Loan Trading Committee held an APLMA Secondary Loan Market Conference on 15 October,
2014 sponsored by Clifford Chance. The conference included an “Overview of the Secondary Loan Market” by
Kate Kwan (JPMorgan), “Understanding Delayed Settlement / Buy In Sell Out / Information Sharing” by Dauwood
Malik and Andrew Hutchins of Clifford Chance, and a panel discussion on “Trends, Developments & Opportunities
for Growth” with Kate Kwan, JPMorgan as moderator, and Steve Lyons, SC Lowy, Kevin Tham, Merrill Lynch,
Joe Cheung, Standard Chartered, and Ronnie Mahal, HSBC as panellists.
To summarise, market players see most loan trading activity in countries such as Australia, Hong Kong and
the Middle East. Industries include shipping, aircraft, commodities, mining and mining-services. With Basel III
and portfolio management and control, we see more and more commercial banks coming out to manage their
portfolios by selling loan exposures. Coming into 2015, market participants see that the trend would be more or less in line with 2014
and are hopeful of seeing more secondary loan activity in the region.
Year ahead
The Committee plans to organise seminars in Taiwan and Singapore in 2015. Please stay tuned if you are interested in knowing more
about market developments and the legal aspects of the secondary loan market.
Young Leaders Committee Australia
The Committee was established for young professionals with up to fi ve years experience in banking and
fi nancial services in Australia.
Its prime objective is to provide networking, professional development and market knowledge events where
like-minded young professionals can draw from the expertise of more experienced professionals in the market.
Events include discussions of topical issues and themes, development and advice relating to career progression,
technical and leadership skills and of course networking opportunities.
Sandra Pemberton
Nor Masliza Sulaiman
Kate Kwan
Bianca Cogan
Grazia Zappia
19Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
The APLMA Young Leaders Australian Sub-Committee again had a successful year with 7 events run across Melbourne and Sydney in
2014. The energy, drive and commitment of the committee members have ensured that a new and relevant range of events were
brought to the broader association members.
We were very lucky this year to have a number of institutions sponsor events and a special thank you to Allens Linklaters, Ashurst,
King & Wood Mallesons, and Norton Rose Fulbright.
New Chair
I will be stepping down as chair in January and the committee is pleased to announce that Grazia Zappia will be the incoming Chair
for 2015. Congratulations Grazia. Further appointments on the committee will be released in the next Newsletter.
Finally, a huge thanks and congratulations need to go out to the hard work of the 2014 committee members, without whom we could
not have delivered on the objectives and events we had set out for the year:
Events:
Events held over the past year include:
i) Melbourne
– Networking Event – Lawn Bowls
– Different Debt Platforms and how they fi t into the market
– Lifecycle of a Private Equity deal
ii) Sydney
– Lifecycle of a Private Equity deal
– Development session on “How to give an effective presentation”
– Syndications Roundtable
– Networking Event – Amazing Race
Further information will be provided on events in 2015 and the Committee looks forward to seeing you at these events throughout
the year.
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21Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Simon Leung (Taipei Fubon), Heather Lu (Taipei Fubon)
Nancy Wang (ANZ), Danielle Roman (Mourant Ozannes)
Lucas de Olaran (BAML), William Yuen (BAML), Alexandre Sieradzki (DZ Bank)
Over 60 members attended
Lan Feng (China CITIC Bank), Henry Ho (Mizuho), Ivan Cheung (BNP Paribas)
APLMA Hong Kong Young Leaders Christmas PartyOver 60 members attended the Young Leaders’ Christmas Party in Hong Kong on 10 December, 2014. This event provided an excellent opportunity to network with the leaders of the future.
Maureen Gao (CDB), Spring Cheung (CDB), Vivian Wang (CDB), Fang Wang (Kirkland & Ellis)
Clayton Chan (China Merchants Securities), Jinghong Weng (Natixis), Edward Chan (China Merchants Securities)
Alan Yeung (Maybank), Ka Ming Chan (Maybank), Sandeep Patnaik (Axis Bank)
22Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Steve Lyons (SC Lowy), Ronnie Mahal (HSBC), Kate Kwan (JP Morgan), Joe Cheung (Standard Chartered), Kevin Tham (BAML)
Dauwood Malik (Sponsor: Clifford Chance), Andrew Hutchins (Sponsor: Clifford Chance)
Steve Lyons (SC Lowy)
Janet Field (APLMA)
Ronnie Mahal (HSBC), Kate Kwan (JP Morgan)
APLMA Secondary Loan Market SeminarOver 120 members attended the APLMA Secondary Loan Market Seminar on 15 October, 2014. For highlights of this event, please refer
to page 23. Special thanks to venue sponsor: Clifford Chance.
Kevin Tham (BAML)
A full house of over 120 members Timothy Lee (Bank of China), Kate Kwan (JP Morgan), William Wong (RBS)
23Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Outlook for the secondary market
Kwan began by asking: What are the latest trends in Asian loan trading?
Tham: “It is a good question and a question we
often get asked. As everyone knows Asia is a
very episodic market. It is unlike other loan
markets where there is a steady universe of
assets that trade year-in and year-out.”
He said over the last couple of months “trades
due to the Eurozone crisis have fi zzled out”. But,
on the distressed side, he continued to see fl ows
from ‘large-cap situations’, particularly for
names like BrisConnections.
For par-loans he has seen greater balance-sheet
management of shipping names, particularly for
Korean, Japanese and Chinese credits. “Secured
loans trading at 85-90 cents have been
particularly active. And we have even seen
distressed names from Indonesia such as Berlian
Laju Tanker.” He saw the trend continuing as
“some banks – such as German banks – have
portfolios to dispose of”.
Mahal: “As a newcomer to Asia I have found it
very illiquid compared to the US and Europe.”
The APLMA held a Secondary Loan Market Conference on 15 October, 2014 in Hong Kong sponsored by Clifford Chance.
The programme began with Dr Kate Kwan, Executive Director and Head, Secondary Loan Sales Asia Pacifi c at JP Morgan in Hong Kong giving a short Secondary Loan Market Overview presentation.
This was followed by presentations from Dauwood Malik and Andrew Hutchins, both Partners at Clifford Chance. The topics were ‘Understanding Delayed Settlement’, ‘Buy In, Sell Out’ and ‘Information Sharing’.
The afternoon concluded with a panel discussion moderated by Kate Kwan on “Trends, Developments and Opportunities for Growth”.
Panellists were:
• Steve Lyons, COO, SC Lowy, Hong Kong
• Kevin Tham, Managing Director, Global Loans and Special Situations Group, Merrill Lynch (Asia Pacifi c) Ltd, Hong Kong
• Joe Cheung, Executive Director, Loan Syndicate & Distribution, Standard Chartered Bank, Hong Kong
• Ronnie Mahal, Head Trader Secondary Loan Trading, HSBC, Hong Kong
Kate Kwan
Steve Lyons
Kevin Tham
“This is a completely different challenge. What has
kept me busy is not really trading the HSBC
portfolio, but third-party trades. We have set up
a book for event-driven trades of some of the big
names that came out last year, such as Alibaba
and WH Group.”
HSBC has an active global loan trading group
which is headquartered in Europe. Talking to
clients globally is seen as an advantage for the
bank.
Although too late to get involved with much of
the distressed debt that has been traded in Asia,
HSBC has been “pretty busy in the Middle East. In
terms of origination the Middle Eastern market
was huge in 2008, with a lot of Asian banks
involved.”
Kwan then asked Lyons of SC Lowy about his fi rm’s view on the Middle East.
Lyons: “If you go back two or three years we had a
large Australian trading book which was active –
names such as Rivercity – but that has slid off over
the last two to three years.”
24Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Joe Cheung
Ronnie Mahal
“We have moved a lot of resources into the
Middle East. We trade from the Middle East
throughout Asia down to Australia. A lot of the
slack has been picked up by trades in the Middle
East.”
Kwan then focused on industry, noting that besides shipping, mining, and mining services companies are under pressure.
Tham thought that shipping – “particularly in
the container space” – will be an active sector.
“The decline in oil prices will likely mean LNG
tankers, VLCCs and similar classes will be
important for us. Also rig bonds and loans are
interesting in the sense that they are not really
Asian or regional – they are global assets.”
“Australia continues to have a lot of companies
focused on commodities which could present
opportunities, and some South African and
European banks have been running down their
commodity fi nancing books.”
“There are also the junior mining companies and
ancillary businesses that support them –
contractors, infrastructure providers, roads,
ports.”
He said some companies will capitalise on
weakening commodity prices, but that “quite a
few others will enter stress – if you have ten
companies each with US$250-300m of debt,
that gives you a couple of billion dollars to
trade.”
Moving away from the stressed sector, Kwan then asked Cheung of Standard Chartered Bank about opportunities for active primary loan arrangers in the secondary loan market.
Cheung: “Due to Basel III, banks have generally
been more disciplined in their approach to
pricing, fi nal hold, and management of their
credit exposure.” He sees the trend continuing:
“I think, going forward, with more stringent
application of Basel III there will be more
secondary opportunities in the next 12-18
months.”
His other area of focus is on the more lucrative
leveraged or acquisition fi nance transactions
like the recent deals for Alibaba, Focus Media,
Giant and WH Group: “Because these were well
over-subscribed in primary when deal size was
capped. The underlying demand saw asset holders
get scaled down signifi cantly, so we are seeing
banks bidding up the paper and looking for offers
to get more of the asset.”
Kwan then asked Mahal whether being a major player in the primary market helps on the secondary side.
Mahal: “It helps in the sense that I get a lot of
calls from banks asking what HSBC is selling. My
simple answer is usually that we are not selling
anything.”
“But we selectively look to trim exposure and I am
always happy to have a dialogue.”
“Compared with investment banks HSBC is not
an aggressive seller, but the dialogue allows me
to learn who is looking at what. By sharing
information this may help the primary team focus
on the right clients”. A reciprocal relationship with
his syndication team means they keep him
informed about clients and their preferences.
“What do I think about secondary market pricing?
A lot of loans that have been originated here have
relationship pricing and sometimes it does not
accurately refl ect what should be market pricing.”
The moderator then invited Lyons of SC Lowy to talk about the challenges of being broker/dealer.
Lyons: “I have been in the industry for about fi ve
years. Our principals have been in the industry in
Asia for about 15-20 years, and we’ve seen a lot
of players come and go.” He mentioned three main
challenges.
“Firstly, there are fairly signifi cant barriers to entry
to being a successful broker/dealer. You need to
have a balance sheet, because if you are going to
make markets you have to hold inventory. Things
like minimum holds of A$10m in Australia means
if you are going to build up inventory you have
to have capital.”
“A greater barrier to entry is really having in-depth
knowledge – having a strong research team. SC
Lowy has one of the largest fi xed-income research
teams in Asia. For every asset that we either invest
in or trade we get in-depth credit analysis, we
meet CEOs, CFOs and industry experts. We really
understand what we are trading.”
“with more stringent application of Basel III there will be more secondary opportunities”
25Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
“It is hard for those that are just agency trading
or match-principal trading to compete without
the same in-depth knowledge.”
“The third barrier to entry is just experience.
Having an experienced trader on the desk,
someone who has seen the ups and downs in
the market over a long period of time is
invaluable. That experience is very hard to
duplicate.”
Kwan: What are special situations and what opportunities do you see in this area?
Tham: “One of our investment strategies is to
partner with banks to provide capital. This might
be a bit of mezzanine or second-lien to provide
a bit of stretch on the debt funding side to
support corporates in the region.”
“My group runs a balance sheet of close to
US$1bn of which distressed and special
situations form a fairly large component.”
“In special situations when dealing with single-
or double-B corporates we provide very high-
yield loans or equity-linked loans for growth
capital.”
“We have also been particularly active in the
resources sector, both oil and gas, and mining.
Last year there was a US$340m deal for Niko
Resources of Canada. It had production blocks
in India which it owned jointly with Reliance
Industries. The deal paid a 15% coupon as well
as revenue-sharing warrants on top.”
“However we should not overestimate that deal.
I think every dealer would probably do between
three and six special-situation deals a year. It is
not a massive market.”
“Banks in this room are still very liquid and are
able to offer pricing at very attractive levels.
Deals have to be event-driven or regulatory-
driven before someone steps up to pay double-
digit interest rates”
Kwan mentioned that JP Morgan, besides
secondary loans, is also active in private
fi nancings and similar structured deals where
the bank provides loans to an SPV with security
being bonds or convertible bonds – special
structures to enhance the yield on loans.
The moderator then asked Lyons if he is seeing any opportunities in the special situations arena?
Lyons: “It’s just a few transactions each year. We
are very opportunistic and do special situations
for the credits that we get to know very well.”
“Currently, and over the next year, we are investing
in and trading in shipping, mining and those types
of areas. That space is where we will be active for
the moment and see ourselves being active for
the next 12 months.”
Kwan: As we know secondary in Asia is at least 10 years behind what is happening in Europe and the US. What should we do to further develop this market and get more banks or participants to join or churn their assets?
Cheung: “It is tricky because the Asian loan market
is predominantly about banks. Most are still very
low on leverage. Hong Kong banks have a 73%
loan-to-deposit ratio, whereas European banks are
at maybe ~100%, and US banks at 70-90%. Banks
will continue to provide relationship-driven pricing
and that will hinder the growth of the secondary
loan market. This will be very diffi cult to change
until banks get more leveraged.”
He said Standard Chartered has been developing
a non-bank FI investor base from credit funds,
family offi ces and leasing companies in Japan, in
order to develop an alternative source of liquidity.
“A few months ago when the credit spread
between the bonds and loans was much tighter
we sold some China property loans to non-bank
FIs, but now it would be very diffi cult given the
reversal.”
Mahal: “If you look at the growth of secondary
volumes in the US and Europe, it happened
because of the shift in the investor base. The
investor base became more institutional because
of CLOs. It is a topical subject over here: is there
potential for CLOs to be done here? Some
non-banks are looking at these types of
structures. I think that would help increase the
secondary flow. Also more event-driven
fi nancing, such as LBO-type deals. That will
create secondary volume too.”
“Banks will continue to provide relationship-driven pricing and that will hinder the growth of the secondary loan market”
“growth of secondary volumes in the US and Europe...happened because of the shift in the investor base”
Crédit Agricole Corporate and Investment Bank includes social and environmental criteria in its fi nancing policies, proving
its will to act in favor of responsible growth.
www.ca-cib.com
actively promoting
responsible
growth
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27Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Kwan: How do we narrow the pricing gap between buyers and sellers? Sellers always want to sell at a lower yield while buyers want it the other way around. How do you overcome this situation?
Lyons thought better research would help. “If
you have buyers who are really knowledgeable
about the credits and what they are purchasing,
then the closer buyers and sellers will get. With
parity of information you suspect that views of
a credit are going to be similar.”
Tham thought that it would help if regulators
and governments got involved. In Singapore,
government-linked institutional investors –
such as ST Asset Management, Seatown
Holdings, GIC and Temasek – have been involved
in the loan market.
Q: Do you think recent regulatory and compliance issues such as onboarding and know-your-client rules have affected the effi ciency of the market?
Mahal: “Yes, but at HSBC we are pretty
fortunate that in APAC we have a lot of
relationships with clients that are already
onboarded. But the process is more onerous
now, so it can have an effect in closing trades.”
Kwan agreed that onboarding requirements
could take a long time for her institution.
Tham said it has not stood in the way of doing
trades, “but it really stands in the way of getting
them closed”.
“BAML has a large middle-offi ce support team
that is needed as a result, so we carry a very
heavy and costly infrastructure.”
“Politically-exposed persons, family offi ces, and
investment vehicles, especially in the distressed
world are challenging and we need to be mindful
of these things before we trade.”
More importantly nowadays, particularly for his
organisation and other US counterparts, the
“optics” or reputational consequences of certain
trades need to be considered as well.
“If something is 100% legal but might not look
great – such as helping the shareholder buy bonds
back or working with a party to accumulate a
stake in a debt structure with the intention of
doing a loan to own – some of these things do
come under more scrutiny than before. We need
to employ more people to make sure we are on
the right side of things.”
Kwan’s last question was about the next year’s market outlook.
Cheung: “There will defi nitely be more China
transactions in both primary and secondary,
especially given some of the corporate scandals
and potential credit issues in POEs.”
“There will be more offers on China property given
what is happening in the market and there should
be growing interest on both the primary and
secondary side.”
He sees a greater focus on onshore / offshore
inter-creditor property structures rather than
China holdcos. “Onshore / offshore is more
favorable from a credit standpoint given the
access to mortgage via an intercreditor between
onshore / offshore. There will be growing interest
in these transactions in secondary and primary.”
Mahal: “I think China is probably the big story –
that is where you will see a lot of volume in 2015.
In terms of favourite jurisdictions, these are
Australia, Korea, Singapore, but the supply has
been pretty tight so we need to see more primary
there before secondary can kick in.”
Written by:Instanter Ltd
“reputational consequences of certain trades need to be considered”
“China is probably the big story – that is where you will see a lot of volume in 2015”
28Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Syndicated lending in Taiwan: opportunity amidst challenges
Crowded banking sector
Taiwan’s banking sector is considered one of the most crowded sectors when compared to others in the region. With 38 domestic banks and almost an equal number of foreign counterparts, banks are competing hard to get a piece of the pie, which has led to margins touching rock bottom.
Taiwan/China pact
The biggest opportunity for Taiwanese banks was the signing of the pact between Taiwan and China, which opened up the China market and gave growth opportunity to Taiwan’s saturated banking sector. Not surprisingly every bank had an aggressive strategy to tap into growing their business in mainland China from bilateral lending deals to complex syndicated deals. The fact that China has become Taiwan’s largest debtor and Taiwanese banks’ exposure was valued close to US 100Bn by the end of Q2 2014 has resulted in increasing concerns from the Central Bank and the Ministry of Finance.
Regulator curbs China lending
With the regulator taking steps to curb lending to Chinese corporate, banks in Taiwan can expect larger scrutiny while doing such deals. The impact has already been seen: In Q3 2014, Taiwan’s syndicated lending witnessed one of the worst quarters in the last six years. With banks fl ush with US dollars, it is becoming imperative for them to look for business in other markets, such as India and Indonesia.
As Taiwanese banks’ foray into more overseas markets to grow their syndicated lending business, they will need to overcome competition not only from local domestic banks but also other foreign banks, which enjoy early mover advantage and are well established. Large foreign banks have continued to use
technology to help them establish themselves in overseas markets. State of the art lending systems implemented by these banks have not only helped them in consolidation but the benefi ts of such systems have been multifold. Banks have witnessed a ten-fold increase in the number of loans and a reduction of up to 85% of servicing these loans leading to higher customer satisfaction. Banks have also experienced a 100% reduction in errors and overall IT savings of more than 40% through reducing the number of systems required to manage loans.
Regulatory changes
Taiwanese banks, like many other Asian banks, continue to support their commercial complex loan business by using their legacy core banking system, single-function secondary systems, and manual processes. While this setup may have been adequate in the past, it is a poor fi t for today’s increasingly complex loans, marketplace dynamics, and regulatory framework, which is becoming tougher to comply with unless banks have complete visibility of their lending books.
Core banking systems are especially weak in the areas of loan pricing and options, and multiple transactions. They also have limited hierarchies and have no syndication capability. This makes it diffi cult for banks which use the core plus add-ons model for their commercial lending business to participate in the growing market for syndicated and other complex loans. It also poses a challenge for banks (especially mid-market ones) who want to enter new geographical markets quickly in order to be able to serve large regional clients.
In addition, the disparateness entails data re-entry to normalise loan data across systems, as well as the use of spreadsheets, paper checklists and external diaries as workarounds and to communicate with clients and internally within the bank. Such data re-processing and manual
Amit Chopra
“The biggest opportunity for Taiwanese banks was the signing of the pact between Taiwan and China”
“the regulator took steps to curb lending to Chinese corprorates”
29Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
patchwork and reporting are inherently error-prone, thus creating a wasteful need to always have to check for accuracy. Furthermore, such practices are not streamlined, redundancy is common, and workfl ow and document tracking capability are poor.
As per Celent’s report on the Top 10 Trends in Corporate Banking for 2014:
“For most banks in the developed world, the technology that supports the commercial lending business is outdated and fragmented, with literally dozens of third-party software packages, homegrown applications, and less than industrial strength database and spreadsheet solutions being used.”
Loan technology
In the syndicated lending world where relationship managers are faced with stiffer targets to increase revenues for the bank, banks also need efficient middle and back office systems to support frontend sales teams by way of up to date systems. The ability of the bank to effi ciently service a loan over its life
span can be a differentiator in this highly competitive market place. Lack of proper systems also poses a reputation risk for the banks among their technologically advanced peers.
Integrated loan technology undoubtedly brings opportunity amidst the various challenges faced by banks. Lending continues to be one of the key revenue generators for banks and commercial lending is one of the few bright spots in banking today. Consumer lending helps banks to establish their presence in the market and commercial lending continues to drive higher revenues for the bank. With the criticality of this business function, commercial lending certainly deserves dedicated and state of the art systems.
About the author
Amit Chopra heads the Syndicated and Corporate Lending Solution team for Misys in the Asia Pacifi c. Amit has over 15 years of experience in the region and in lending in both corporate and retail banking. As part of his role at Misys, Amit Chopra is responsible for FusionBanking Loan IQ, which is the market leading system for Syndicated and Bilateral Lending.
“relationship managers are faced with stiffer targets to increase revenues”
30Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Guy Hargreaves (Moderator), Atul Sodhi (Sponsor: CACIB)
Dariusz Kowalczyk (Sponsor: CACIB)
Guy Hargreaves, Atul Sodhi (Sponsor: CACIB), John Corrin (ANZ)
Janet Field (APLMA)
Siong Ooi (BAML), Phil Lipton (HSBC), Ashish Sharma (Credit Suisse)
APLMA Asia Pacifi c Syndicated Loan Market Outlook RoundtableOver 140 members attended the APLMA Market Outlook Seminar on 26 November, 2014. For an overview of key highlights please refer to page 32. Special thanks to sponsor: Credit Agricole Corporate & Investment Bank.
Atul Sodhi (Sponsor: CACIB), John Corrin (ANZ)
John Corrin (ANZ), Siong Ooi (BAML), Phil Lipton (HSBC) Ashish Sharma (Credit Suisse), Aditya Agarwal (RBS)
31Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Members network at cocktail reception
A full house of over 140 members attended
Dai Chang Song (ADB), Ellie Crespi (Harneys), Chris Raciti (ANZ), John Corrin (ANZ)
Guy Hargreaves, Atul Sodhi (Sponsor: CACIB), John Corrin (ANZ), Siong Ooi (BAML), Phil Lipton (HSBC), Ashish Sharma (Credit Suisse), Aditya Agarwal (RBS)
Jolyon Ellwood-Russell (Simmons & Simmons), Janet Field (APLMA), Theron Alldis (SC Lowy)
APLMA Asia Pacifi c Syndicated Loan Market Outlook Roundtable
Phil Lipton (HSBC), Oliver Huffmann (UniCredit), Mariachiara Cefaratti (UniCredit)
Charmaine Lo (BNP Paribas), Jennifer Chung (BNP Paribas) Teena Jaisinghani (Axis Bank), Kingsley Ong (Eversheds)
32Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Asia Pacifi c loan market – outlook for 2015
Hargreaves began by noting the dominant global market theme appeared to be technology companies, mentioning the world’s biggest IPO for Alibaba and Facebook buying Whatsapp for US$19bn. His fi rst question to the panel was: What was the best syndicated loan this year (preferably one that your bank was not involved in)?
Sodhi chose the global refi nancing for Tata Steel
“as it has a lot of complexity and includes
European and Asian tranches”. “It is challenging
because it is the steel industry – a diffi cult sector
in today’s economic environment. The client put
a good banking group together, covering
differing pockets of liquidity.” “The deal hasn’t
closed yet, but has been very well received by
the market.”
Corrin identifi ed Woolworths as a contender; a
deal done in Australia and syndicated to
insurance companies. It had “a very innovative
The Asia Pacifi c Loan Market Outlook Seminar – held on November 26, 2014 at the JW Marriott Hotel in Hong Kong – included a discussion panel to review the current year and to discuss the outlook for 2015. The moderator was veteran Asian banker Guy Hargreaves.
Panellists were:
• Atul Sodhi, Chairman APLMA, Managing Director & Head, Loan Syndication, Debt Origination and Distribution, Asia Pacifi c, Credit Agricole CIB, Hong Kong
• John Corrin, Global Head of Loan Syndications, ANZ, Hong Kong
• Phil Lipton, Managing Director, Head of Loan Syndications, Asia Pacifi c, HSBC, Hong Kong
• Aditya Agarwal, Chairman APLMA Singapore Branch, Managing Director, Head – Loan Markets, APAC, The Royal Bank of Scotland, Singapore
• Siong Ooi, Managing Director, Head of AP Syndicated & Leveraged Finance, Asia Pacifi c Debt Capital Markets, Bank of America Merrill Lynch, Hong Kong
• Ashish Sharma, Head of Loan Syndications, Asia Pacifi c, Credit Suisse, Hong Kong
Atul Sodhi
Guy Hargreaves
John Corrin
Phil Lipton
structure” and “broke new ground”. He considered
it an impressive deal, one which he wished his
bank had been involved in.
Ooi picked the Goodpack transaction, as it was a
large deal that involved commercial and investment
banks. He believed it to be one of the largest Term
Loan B (TLB) deals taken to the US. It was “an
interesting deal that hopefully leads to the evolution
of the market”. He would like to “see the bank market
in Asia try to bridge some of the gaps that exist
between Asia and the US TLB markets”.
Lipton also opted for Tata Steel for its size and
complexity: “Even though it has not been fully
completed yet, it is already a successful deal going
by the over subscription at the top level”.
Sharma chose CT Corp because of its size, which
was large for an Indonesian borrower at
US$1.275bn. “It was a highly-structured and
complex deal, and syndication was interesting
because it was marketed as a single transaction,
but had three different credits; one of which was
a holding company. A ground-breaking deal
considering it was a refi nancing of the deal done
only the year before”. He said it “set the tone for
the Indonesian loan market in general.”
33Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Aditya Agarwal
Siong Ooi
Ashish Sharma
Agarwal also liked Tata Steel and CT Corp, but
picked Huawei Technologies: “A largely European
syndication for a Chinese issuer, a fi ve-plus-one-
plus-one structure, and a size of US$1.5bn is
unprecedented.”
Hargreaves conducted an audience poll on expected loan volumes for next year in the Asia-Pacifi c. Volumes year-to-date are around US$368bn, compared to US$461bn for full-year 2013. The audience polling result was for around US$400bn or slightly more, a relatively bearish view for next year. What did the panellists think?
Lipton: “Volumes have slowed signifi cantly
coming into the fourth quarter this year, after
a very strong fi rst six months. Loan volumes in
October are meaningfully down in comparison
to last year. Last December was a very strong
month, with around US$50bn in volumes, so
this last quarter may look quite weak in
comparison. The pipeline now leading to Chinese
New Year looks okay, but it’s a question of will
this be as good as the past few years?”
Ooi thought that: “There aren’t the 2013-type
volumes in the pipeline now.” He expected
volumes for 2015 to be at around the US$400-
450bn level.
Hargreaves: How does the panel see the market? Is it in healthy shape – any negative structural trends to watch out for?
Corrin began by saying the market is very
healthy, stating that almost all this year’s deals
have been successfully syndicated: “A good
barometer of how the market stands”. However,
he believed it is going to get tougher, as even
with high volumes of business, banks will
probably be “getting paid less, as everything is
being squeezed very hard”. Despite this, the
market is “in very good shape” and has been able
to co-exist well with the bond market.
Sodhi expected a 5-7% change, either an increase
or a decrease, in loan volumes next year. The
number of arranger banks is increasing and deals
are usually over-subscribed. But retail liquidity is
not growing and remains low in many parts of
the region. This was a worry because arranging
banks tend to make their returns by taking skim
from these sorts of deals.
Ooi added that a challenge faced by arranging
banks is the increase in self-arranged deals owing
to strong liquidity. He agreed with Corrin: “While
volumes are high, banks arranging deals and
seeking underwriting income will be dramatically
impacted by such strong liquidity.”
Hargreaves asked Sharma: Are banks below the top-level at risk from how much liquidity there is?
Sharma agreed with the statement, as around
75% of the deals are very “clubbish in nature”.
They might not be branded as clubs, but selling
only around 5% into the market should not be
regarded as a syndicated deal. However, a positive
result of strong liquidity is that some banks and
funds are now more willing to “play outside their
comfort zones with deals that are higher yield or
more structured”. “At the same time there are
funds that previously wanted double-digit yields
that are now willing to look at deals at Libor plus
6-7%.”
Agarwal made a distinction between loan volume
and syndicated loan volume. He gave as an
example the WH Group refi nancing that closed a
few weeks ago. “The deal last year was syndicated
and well received. The refinancing was still
US$1bn, but was closed as a large club. In regards
to volumes, a lot of these loan volumes don’t
translate over to syndicated loan volumes.” He
further added that he believed real syndicated
loan volumes for 2015 will be down.
Audience poll: What will pricing be like for 2015? Audience polling resulted in most believing pricing will decrease by up to 10%. Hargreaves asked Lipton for his view.
Lipton “It is diffi cult to tell, as unexpected events
can make an impact – in India a few years back
“a challenge faced by arranging banks is the increase in self-arranged deals”
34Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
pricing went up as a result of a few economic
setbacks. Pricing has also gone up quite
signifi cantly this year in China and Hong Kong
(with the exception of the blue-chips) because
of factors such as the higher cost of funds for
Taiwanese banks and increased supply. However,
the general trend is now downwards as the
market is very competitive. This is despite
upward pressure from regulatory issues like
Basel III starting to make an impact. In addition,
the cost of funds for banks is higher than it used
to be, so that helps create a pricing fl oor.”
Hargreaves asked Ooi: If US interest rates go higher next year, how will that affect pricing?
Ooi “Talking about credit spreads, as opposed
to bond-market yields, I don’t see much impact.
But we need to look at two segments: There are
investment-grade blue-chips where we have
seen a lot of spread compression that has
bottomed out.” “The chase for yield is now at
the higher spreads. There is increased competition
for sub-investment-grade credits paying
spreads of 2-4%, and we may see some spread
compression here.”
Sodhi thought there are a few trends that could
impact pricing such as Japanese and European
central banks putting more money into the
banking system, which helps compress credit
spreads. He doesn’t believe corporates will
borrow more in the next year since economic
activity is not strong. “But on the fl ipside, there
are regulatory pressures such as Basel III to push
pricing up.” Overall, he believes pricing will
remain about the same, at least in the early part
of 2015.
Corrin said he does not understand why
investment-grade credits in Asia are priced so
much higher than in America or Europe.
“European pricing is signifi cantly lower than in
Asia, but largely with the same Japanese and
European banks involved.” Using Alibaba as an
example he believed pricing will decrease:
“When Alibaba initially borrowed, it had very
attractive pricing, but this subsequently came
down signifi cantly for the current revolving
credit. Banks moan about the decrease in
pricing, yet they continue to support these
deals.” He doesn’t see many “voting with their
feet”. He noted that often there is no difference
between blue- or red-chip pricing and he remains
quite pessimistic about the pricing trend.
Hargreaves: Do you think pricing levels are supportive of jumbo deals?
Sharma defi ned jumbo as US$5bn or more. He
agreed with Corrin’s thinking that pricing will go
down for investment-grade credits, with pricing
impacted by lower rates paid in the bond market.
“The bond market today offers overall better
pricing than the loan market, especially for longer
maturities.” “However, at higher yields, companies
don’t have access to the bond market.” He thought
“the interesting space to watch is LBO pricing,
where pricing has remained stable at 4% or
higher.”
Agarwal said most Asian borrowers are quasi-
BBB- credits. There is also a small market for
leveraged-fi nance or high-yield deals; but “that
volume is signifi cantly smaller than for good
corporates with which banks have a good
relationship.” “It is a combination of factors
already mentioned that infl uence pricing. Nobody
wants to miss a deal, so instead of having fi ve or
six arranging banks – now it can be 12 or 13 – then
the client might only want to have a club, because
a syndicated deal would be considered too
expensive.”
Audience poll: Taiwanese banks have been important contributors to liquidity in the market. Going forward, do you expect them to be more aggressive, no change, or less aggressive and retreat to the home market? Audience polling results in fairly equal results.
Sodhi noted that it has been a tough year for the
Taiwanese going back to when they had liquidity
problems and a high cost of funds. “The cost of
funds problem has eased off, but their regulator
has been clamping down on overseas exposure.”
He believed they will be a little more cautious, but
will not retreat to home; they will become more
focused on top-tier names. “They will remain an
important source of liquidity, indeed, they appear
to be the only signifi cant source of retail liquidity
in the market. The question is: Where will other
sources come from in the next few years?”
“investment grade credits in Asia are priced so much higher than in America or Europe”
“the interesting space to watch is LBO pricing”
35Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Hargreaves then asked: On that note, are there regions where lenders are becoming more aggressive?
Corrin remarked that institutions such as
Babson are more active than before, particularly
from Australia: “But the obvious area where
liquidity is coming from is the Gulf, where banks
have a lot of money and some are expanding in
Asia”. He expects they will be “quite signifi cant
lenders in 2015.” However, they can be “in and
out” investors: “When liquidity is good they pile
in, but the current declining price of oil might
curb their enthusiasm for joining deals.”
Ooi saw the Taiwanese as becoming more
aggressive in terms of structures and pricing,
and also, increasingly, leading deals. He also
mentioned Middle Eastern banks as a pocket of
liquidity, though: “the ones to look out for are
Japanese banks, especially second-tier ones.”
“They are sitting on a lot of liquidity and are a
good source of low-cost funding.”
Hargreaves: Last year was about recovery for European banks, do you believe that will be the trend in the future?
Sodhi said “2011 and 2012 were tough years for
European banks because of the Eurozone Crisis.
The situation is back to normal now, due to
actions by the regulators and banks. For the
foreseeable future, European banks will continue
to be very involved in Asia.”
Agarwal said RBS was ranked the seventh most
active bank in Asia and that only one other
European bank was in the top ten. “All banks can
have weak quarters and there is always someone
waiting to take that space, so at times you will see
Middle Eastern banks at the top, or Korean banks,
or even Philippine banks lending in Indonesia;
all-in-all it is a very healthy market.”
Audience poll: Where will the strongest loan growth take place in 2015? Audience polling results in Southeast Asia and Greater China being the top-two choices. Hargreaves asks Lipton: Is this a continuation of recent trends?
Lipton pointed out that Hong Kong and China
have had huge growth over the past few years,
and this may not continue to the same extent. He
expects the markets to remain strong, “but
whether there will be the same percentage of
growth remains to be seen”. “Australia has a lot
of project fi nancing to spur the market. Southeast
Asia – especially Indonesia – also has a lot of
potential. So does the Indian subcontinent, where
a lot of infrastructure is needed.” He would prefer
broad-based growth across Asia rather than just
be driven from one country.
Ooi agreed with Lipton with regards to Greater
China. He also believes “Australia will be very
strong because of the number of privatisations,
such as Queensland Electricity and New South
Wales Electricity – tens of billions of US$ supply”.
Southeast Asia outside Singapore and the
Philippines are small, but in percentage terms
there will probably be increases. Overall he believes
Australia will be most active, especially for
infrastructure.
Corrin agreed with Ooi, saying Australia will
provide a lot of opportunity in 2015. He also
agreed that with regards to Southeast Asia “in
percentage terms there will be growth”. But he
further believed there are “still a lot of big
companies in China which have not accessed
international debt markets.”
Hargreaves directs a question towards Agarwal: The Singaporean market is normally dominated by property and the big commodity traders. Has it been the same this year, and is this the outlook next year?
Agarwal “Real estate and commodities continue to
dominate the Singapore market; it is a largely S$
market, meaning you need to book it onshore in S$
otherwise there will be taxes. It is a unique market
that gets away with price compression because of
the S$ dynamics. Things will probably remain the
“the obvious area where liquidity is coming from is the Gulf”
“Australia will be very strong because of the number of privatisations”
“there are still a lot of big companies in China which have not accessed international debt markets”
36Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
same, though the property market has been a little
subdued because of government measures.”
Hargreaves directs a question towards Sharma: Do you think the fact we have had elections in India and Indonesia has boosted sentiment in those countries?
Sharma agreed, especially in the case of India:
“though Indonesians are a little more pessimistic
than foreigners about their country which
means US$s will be a lot more competitive than
rupiah loans.” He also mentioned US$400m
raised for Pakistani borrowers this year, including
the fi rst sovereign loan in 15 years.
Hargreaves: What opportunities do you see in smaller emerging markets? Do you believe a few of the larger players ignore these opportunities?
Lipton said: “if you tot up the volumes from
the smaller markets it doesn’t amount to a lot”.
“The overall loan market relies on the six largest
countries already spoken about – anything
from these smaller places is a bonus.” “Despite
others talking about massive potential in
Vietnam, I would be hesitant to say that
Vietnam will be ‘the next Indonesia’ – I would
rather hope to see both Indonesia and Vietnam
grow much more strongly.”
Audience poll: What kind of volumes should we expect for acquisition fi nancing in 2015? Polling results in the audience feeling bullish about acquisition fi nancing volumes. Hargreaves:
What do you feel about M&A activity next year?
Corrin thought the prospects are “pretty good”,
with plenty of acquisition activity from China. He
remarked that a few markets, like Thailand, have
surprised this year with strong growth, though
this is unlikely to continue. “China will drive the
acquisition market which is good news for
syndicated loans and bonds – not necessarily for
leveraged fi nance itself.”
Sodhi agreed with Corrin that acquisition volume
will be strong: “Because companies from China
and Japan are continuously looking to buy
overseas.” More importantly, “the means to fund
these acquisitions is better than it has been in the
past. For equity, bond, and loan markets to all be
open is rare.” “If corporates are looking for
funding, they can fi nd it with ease, which will
really boost volumes over the next year.”
Sharma also agreed there will be lot of demand
for acquisition fi nancing next year.
Hargreaves: Are the LBO markets looking healthy next year?
Ooi said BAML is focused on LBO activity: “But
the reality is that there aren’t that many LBO
transactions of size, with most of the activity
being in Australia.” He mentioned Treasury Wine
Estates as potentially being a very large deal, until
it was pulled. Ooi remained optimistic in the sense
that sponsors do have capital to deploy, and will
continue to look for investment opportunities:
“But the reality is if you see six or seven LBO deals
close in a year, then that is a good year”. He said
a lot more LBOs are coming to the “secondary
market” for such things as recaps and refi nancing,
getting companies ready for IPOs.
Lipton said: “Every year panellists are very
optimistic and bullish about M&A, however if you
look at the statistics, this segment has been very
static at around 9-11% of volumes. “Many of these
deals could also be bridging loans which go
straight to the capital markets.” When PCCW
borrowed US$12bn to buy Hongkong Telecom in
2000 bankers predicted that it would herald the
start of much bigger transactions in Asia although,
outside of Japan, it still remains the largest single
deal, nearly 15 years later.
Corrin asks: Do you think that PCCW deal could be done in 2014?
“China will drive the acquisitions market”
“there aren’t that many LBO transactions of size”
37Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Lipton thought so, although there are “fewer
banks out there”. Corrin remarks it is incredible
that 14 years have passed without a comparable
deal. He felt it would be more diffi cult to do that
deal today than 14 years ago.
Hargreaves asked about offshore renminbi loans.
Corrin said the renminbi market has been very
slow, and the bond market has been more
appropriate for many borrowers. He did not
expect there to be much change next year.
Hargreaves: Do you think there will be more investment opportunities in US$ or local currencies?
Agarwal said a lot of local-currency deals do
not get reported. He could see a shift away from
US$ according to local interest rates: “If the
policy of easing continues, then you will
probably get a shift away from US$ towards the
local currency, since it becomes more expensive
to borrow US$. It may happen in countries like
India a lot sooner than we had expected. The
local-currency market in India remains very
strong, but it is dominated largely by local
banks.”
Audience poll: What is the single-largest threat to the syndicated loan market in 2015? Many vote for the uncertain economic climate in China. Hargreaves asked Sharma: Is this because the Chinese market is so important?
Sharma agreed and said that Chinese companies
raising money in Hong Kong is a large proportion
of the Asian loan market. Australian mining
companies rely on demand from China: “and
you can apply that logic to other markets such
as Indonesia where companies rely on demand
from China.”
Hargreaves: Professionally speaking, what keeps you awake at night?
Sodhi said the Chinese economy, as it affects
his clients in the rest of the region as well as
around the world. It also impacts the Chinese
banking system. “It is important that the economy
there has a soft landing”.
Corrin describes the market as “benign” but
worries about regulatory changes, such as
competition law, which could change the way
banks do business. Apart from this, his biggest
concern is hiring and retaining good staff: “Your
business is only as good as the people working
with you”. “This is a challenge for banks as the
market gets more competitive, and people move
around more.”
Ooi said – working for a US bank – he was also
worried about the regulators. “More regulatory
scrutiny will naturally have ripple effects on risk
appetite and client selection”. From a market
perspective, he added that aggressive
underwriting could derail a highly liquid market.
Lipton said “Many unexpected things could
happen – a downturn in China or a resurgent
strong bond market taking volumes away from
the loan market.”
Sharma agreed with Ooi about the possible
harmful effect of strong liquidity. He also
highlighted the timeline for syndicated deals:
“They take longer to close than before. It used
to take four to six weeks, but now it is around
nine weeks, and a lot can happen during that
time.”
Agarwal expanded on what Corrin was saying
about regulatory changes and compliance.
Internal compliance is a big issue for him: “For
example, if I were to have a coffee with a state-
owned Chinese or Indian bank I need to log that
information.” “There is too much focus on ‘doing
the right thing’.”
Finally Hargreaves asked: Does it matter if the secondary market develops?
Corrin said “there is not much going on with the
exception of some distressed debt trading, which
has added needed liquidity to this subset of the
market”. He felt the same was true even in the
US and Europe. Banks will continue selling off
their excess positions, and this will be a source
of liquidity which he hoped would pick up in
2015.
Written by:Instanter Ltd
“More regulatory scrutiny will naturally have ripple effects on risk appetite and client selection”
38Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Madeleine Varkay (ADB)
Eduardo Francisco (BDO)
Eugenia Victorino (Sponsor: ANZ)
Janet Field (APLMA)
Les Collett (Willis)
APLMA Philippines Loan Market ConferenceOver 120 delegates attended the APLMA Philippines Loan Market Conference on 12 November, 2014. Speaker presentations are now available on the APLMA web site. For highlights of the discussions please refer to page 40. Special thanks to sponsors: ANZ and Thomson Reuters.
Walter Wassmer (BDO), Boey Yin Chong (DBS), Sergio Edeza (San Miguel), Chris Raciti (Sponsor: ANZ), Alice Cordero (Philippine National Bank), John Corrin (Sponsor: ANZ)
Chris Raciti (Sponsor: ANZ), Alice Cordero (Philippine National Bank), John Corrin (Sponsor: ANZ)
Walter Wassmer (BDO)
39Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Alice Cordero (Philippine National Bank)
Vicente Gerochi IV (SyCip Salazar Hernandez & Gatmaitan)
Members listen intently
Boey Yin Chong (DBS), Sergio Edeza (San Miguel), Chris Raciti (Sponsor: ANZ)
Delegates take the opportunity to network
APLMA Philippines Loan Market Conference
William Henry Timoteo (Philippine National Bank), Janet Field (APLMA)
Anna Mychelle Cruzado (Mizuho Bank), Ma. Luisa Salvador (Mizuho Bank)
Patricio Dumlao (BNP Paribas), Eric Luchangco (BPI Capital), Joseph Yip (BAML), Vincent Valdepenas (BAML)
40Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Banks & Borrowers review opportunities in the Philippines
Corrin began by noting the panellists represented
a broad range of experiences and suggested that
some “controversy would be much welcomed”.
Corrin: Market conditions are improving for borrowers; where do you see domestic pricing moving?
Wassmer agreed that there is a lot of liquidity
which has meant pricing has remained tight.
However, he said many infrastructure projects
are not yet closed. He anticipated that when
these projects do close, due to a reduction in
liquidity, interest rates – or spreads – pricing will
move up slightly, but not dramatically.
Raciti was not expecting any uptick in pricing.
His view was that liquidity in the region, and in
the Philippines particularly, remains strong.
Because of recent upgrades to the sovereign
credit rating more foreign banks are able to
The APLMA held a half-day Philippines Loan Market Conference on 12 November, 2014 in Manila. ANZ was the Platinum Sponsor.
The programme concluded with a Bankers and Borrowers Panel which was moderated by John Corrin, Global Head of Loan Syndication, ANZ, Hong Kong.
Panellists were:
• Walter Wassmer, Senior Executive Vice-President, Head of Institutional Banking Group, BDO Unibank Inc
• Sergio ‘Boy’ Edeza, Senior Vice-President – Treasury Head, San Miguel Corp, Philippines
• Vicente Gerochi IV, Partner, Sycip Salazar Hernandez & Gatmaitan, Philippines
• Alice Cordero, Head of Compliance Group, Philippine National Bank, Philippines
• Chris Raciti, Head of Loan Syndications North Asia, ANZ, Hong Kong
• Boey Yin Chong, Managing Director, Head of Syndicated Finance, Institutional Banking Group, DBS Bank Ltd, Singapore
consider lending. He saw pricing continuing to
move in favour of clients. He was sceptical that
infrastructure will soak up demand as delays and
deferrals, with elections coming up, cast doubt
over some projects. He saw pricing at least
remaining at current competitive levels. He also
saw a corresponding “spill-over into terms and
conditions” to the benefi t of Philippine borrowers.
He said this was happening with refi nancings: “A
progressive movement in favour of the borrower”.
In conclusion, he foresaw: “Steady sails for
borrowers; continued pain for bankers.”
Edeza took the view that borrowing costs will stay
at current low levels. He also saw huge liquidity
among local banks. “Even if the BSP raises rates
the same liquidity fundamentals will drive the
interest rate – or credit spread – scenario.”
Boey also foresaw a lower pricing trend: “The
question is how deep.” He noted that the credit
rating upgrade had enhanced this trend.
John Corrin
Walter Wassmer
Sergio ‘Boy’ Edeza
Vicente Gerochi IV
41Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Corrin: Are we seeing weakened terms and conditions, lighter covenants than before, or any other trends on the documentation side?
Gerochi, He did not see much change in
documentation, although he agreed borrowers
do have “stronger leverage”. We advise borrowers
to also focus on the representations and
warranties, and not only on the commercial
terms. “Although we use APLMA standard
documentation, we can still negotiate, especially
for new borrowers.”
Corrin: The recent deal for ICTSI was a little different in terms of documentation. What were some of the highlights of that deal?
Raciti said the loan for International Container
Terminal Services Inc was unique and set a
precedent for the Philippines, but one which can
be used regionally. We used a “common-terms
structure, not usually seen in Asia – usually it is
seen only in Australia”. “The borrower has
common terms for all future borrowings,
including bilaterals.”
“It mirrored the client’s MTN programme, the
difference being with the covenants,
representations and warranties.” “Under the
loan there are incurrence-based covenants,
rather than maintenance-based covenants. This
type of deal wouldn’t be available for all
borrowers. ICTSI is a pre-eminent borrower
which had not borrowed for a long time. It was
therefore good timing to push for this.” The deal
was “oversubscribed multiple times” and the
pricing was “appropriate for the liquidity
situation”.
Corrin: The interplay between the bond and loan market is important; ICTSI was almost “a half-way house”. For San Miguel, how do you choose between bonds and loans?
Edeza said the company fi rstly looks for speed
of execution: “We favour local markets, but
single-borrower limits are a factor”. “We prefer
loans because they are very fast. Bonds take
longer, especially for international currencies
where you have to do a roadshow. With loans we
just discuss it among banks. We therefore give
priority to the domestic market and the loan
market.”
Corrin: International bankers are not experts on the regulatory and compliance issues in the Philippines. What kind of compliance framework is there?
Cordero said that in the last few years Bangko
Sentral has introduced a lot of new frameworks
for local banks. From AML – Anti-Money
Laundering – laws which includes anti-terrorist
fi nancing (which have resulted in a lot of extra
costs for banks), to the compliance framework for
corporates. “Then there is IT-risk management;
and the latest is credit-risk management. There
are seven frameworks and all banks must adhere
to them to meet the standards of Basel III.”
“While banks are tasked to grow their loan
portfolio, there are statutory limits on loan
growth. Bangko Sentral is being proactive to
ensure the economy remains resilient. Standards
for local banks are very much aligned to those in
other countries.”
“Philippine National Bank is now private, but is
still perceived to be a national bank, and all local
banks have to adhere to local and international
standards.”
Corrin: A Philippine company (Universal Robina Corp) is buying a company in New Zealand (Griffi n’s Foods Ltd). What pipeline do you see for M&A? Is it domestic or international? Do you see an uptick in M&A, will private equity get involved, and might there be LBOs?
Wassmer: There will be opportunities. A lot of
good companies are looking. The diffi culty is
fi nding a company that is willing to be acquired.
“But it is happening more and more.” “Companies
like URC are always looking for good opportunities.
It is up to the banks to see if it fi ts or not.” “Private
equity funds are looking” – the moderator had
Alice Cordero
Chris Raciti
Boey Yin Chong
“Bangko Sentral has introduced a lot of new frameworks for local banks”
43Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
earlier mentioned CVC – “liquidity is available,
but private-equity money does not come cheap”.
“This space will be covered more and more in
the year to come.”
Gerochi said his fi rm is receiving a lot of enquiries
from potential investors. In the banking sector, a
new law has been passed further liberalising the
banking sector and this may result in more M&A
transactions. “Foreign banks may now own 100%
of a local bank.” New minimum capitalisation rules
introduced by the BSP will affect many banks –
one client mentioned that half of thrift banks will
not be able to comply with the minimum
requirements and may become take-over targets,
so there will be opportunities for M&As in the local
banking sector.
“The Philippine government is now regulating
M&As more closely and we now have a
Competition Authority. Before for banks
involved in mergers or consolidations, you only
needed the approval of the Securities and
Exchange Commission and the BSP. Now the
transaction has to be reviewed by the Department
of Justice acting as the Competition Authority,
to ensure it does not restrict trade or result in
a monopoly.”
Corrin: San Miguel has cash from the sale of PAL. Is there a pipeline of M&A fi nancing for takeovers next year?
Edeza said they have a team that is looking; if
there is really a good opportunity they will
consider it.
Corrin: Competition issues related to the syndicated loan market are a hot topic in Hong Kong and London. Is there a law about competition in the Philippines?
Codero instead touched more on the situation for
local banks and the opportunities for banking
sector M&A. “PNB is the number-four bank in the
Philippines and are we are only half the size of
the largest.”
“Conglomerates monopolise funding whether it
is bonds or loans, but there is room for cross-
border loans for overseas expansion.”
“But local banks are engrossed with Basel III
capital requirements and are looking to buy
smaller banks. It is easier and cheaper to expand
your network by making acquisitions than by
organic growth.”
Corrin: What are your predictions for 2015?
Raciti felt that there is growth in the pipeline for
north Asia, including the Philippines. “Things seem
very positive for the end of this year and into the
fi rst quarter of 2015.” “Generally we are seeing
corporates making acquisitions, leverage has
generally come down in Asia, a lot of companies
have good balance sheets, and we have a good
overall capital-raising environment.”
Boey thought volumes next year will be “pretty
good on the dollar side, both onshore and cross-
border”.
Corrin: BDO has a 24% market share of the Philippines, ANZ has 6.8%, how do you see domestic and international markets for next year?
Wassmer said “The market is still good, the
economy is still good, the pipeline is robust, there
are a lot of deals in the works, and there are also
surprise deals such as M&A which emerge quickly.
We are lucky as the leading bank - we have a large
balance sheet which we can leverage, but we
expect competition to be tight.”
Corrin: Are you optimistic about the Philippines in 2015?
Edeza “The Philippines has a lot of catching up
to do especially in terms of infrastructure, with
2016 – an election year – coming up there will be
a lot of spending. He expected continued high
economic growth of 6-7%.”
Written by:Instanter Ltd
“a new law has been passed further liberalising the banking sector”
“Conglomerates monopolise funding”
44Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Owen Chan (Sponsor: Hogan Lovells) presents an iPad Air to Davide Barzilai (Norton Rose Fulbright)
Andrew Hutchins (Sponsor: Clifford Chance) presents the 1st prize Tiffany Voucher to David Lim (HSBC)
Jolyon Ellwood-Russell (Sponsor: Simmons & Simmons) presents a Go-Pro Camera to Alysha Salinger (Morgan Stanley)
Atul Sodhi (CACIB), Les Collett (Willis), Janet Field (APLMA)
Les Collett (Willis) and Janet Field (APLMA) present an Oliver’s Hamper to Jolyon Ellwood-Russell (Sponsor: Simmons & Simmons)
Alpha Lau (Sponsor: Ping An Bank) presents a Magnum of Pierre Paillard Grand Cru Champagne to Boris Bijleveld (Banque Cantonale de Genève)
Atul Sodhi (CACIB) presents a HK$1,000 LUPA dining voucher to Carrie Liu (China CITIC Bank)
Members took the opportunity to network
APLMA Hong Kong Christmas PartyOver 200 members attended the Hong Kong Christmas Party on 3 December, 2014. Special thanks to all the prize sponsors for helping to make this event a big success.
45Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Atul Sodhi (CACIB), Alix Burrell (BNP Paribas), Jean-Yves Korenian (Mizuho), Janet Field (APLMA), Owen Chan (Sponsor: Hogan Lovells)
Christine Chan (Commerzbank), Richard McKeown (Sponsor: Simmons & Simmons), Janet Field (APLMA), Les Collett (Willis)
Pater Ho (CTBC), Katy Chan (APLMA), Rene Chan (Wells Fargo)
Thomas McKay (HSBC), Alix Burrell (BNP Paribas), Sandra Pemberton (NAB)
Chun-Ken Lee (Bank of Nova Scotia), Fanny Mok (Bank of East Asia), Benjamin Wong (DBS)
APLMA Hong Kong Christmas Party
Sandra Pemberton (NAB), Phil Lipton (HSBC)
Atul Sodhi (CACIB), Kenney Cheung (CACIB), Rahul Mathur (GE Capital), Lewis Wong (Standard Chartered)
Vincci Hong (Rabobank), Maiko Kihara (Banque Cantonale de Genève), Priscilla Yeung (Standard Chartered)
46Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
LMA members’ surveyOutlook for the syndicated loan market in 2015
In November 2014, we surveyed our membership on the outlook for the syndicated loan market over the next 12 months. The survey comprised 12 multiple choice questions covering both the primary and secondary markets in general, real estate fi nance and the developing markets specifi cally, and lastly regulation.
The results, on pages 36 – 38, were collected anonymously and represent the personal views of our members, from 32 countries, actively working in the loan market today.
38.3% of respondents believe competitive pressure will most infl uence the syndicated loan market over the next 12 months.
Question 1:Which topic do you think will most infl uence the syndicated loan market over the next 12 months?Not surprisingly competitive pressure in the market remains for the second year in first place at 38.3%. However, the doubling to 31.9%, from last year’s score, and into second place, of those who believe global geopolitical and/or economic risks are most likely to infl uence the loan market, refl ects an awareness that external factors could impact the market in the year ahead. Regulatory requirements remains at around 20%.
Perc
enta
ge
Funding costsof banks
Yield expectations of investors
Regulatory requirements
Global economy and/or geo-political risks
Competitivepressure in the market
0
8
16
24
32
40
5.8 5.0
19.0
31.9
38.3
Question 2:Next year, where do you think the best opportunities will lie in the loan market?Despite increased concern around the economy and potential geopolitical issues, there is a clear increase in confidence that the year ahead will see more M&A opportunities. This area has now passed refi nancing as the best opportunity with a 13.4% increase on last year to 33.5%. Leveraged fi nance remains constant at around 18%, but opportunities in emerging markets is down to 13.5%, probably refl ecting the earlier noted economic concerns.
Perc
enta
ge
Refinancings Corporate M&A
Restructurings Leveraged market
Emergingmarkets
0
8
16
24
32
40
33.5
24.2
11.1
17.713.5
Question 3:What are your volume expectations for 2015 in the EMEA primary syndicated loan market?The increase in expected M&A, however, has not materially driven increased volume expectations. In fact, more believe volumes will remain unchanged this year than last year (41.5% against 34.6% in 2013), probably refl ecting the already evidenced recovery in volumes this year.
Perc
enta
ge
Increase by more than 25%
Increase by more than 10%
Ratherunchanged
Decrease by more than 10%
Decrease by more than 25%
0
10
20
30
40
50
4.0
45.041.5
7.8
1.7
47Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Question 4:What will the volume of CLO issuance in Europe be in 2015?With over 30 vehicles priced to the end of November and a strong pipeline, full year 2014 CLO issuance volume should top €14 bn, at the upper end of market forecasts and nearly double that seen in 2013 (source: S&P Capital IQ LCD). Having shown cautious optimism in last year’s survey, respondents remain generally conservative with the majority seeing 2015 issue volumes in line with or lower than this year.
Perc
enta
ge
0
10
20
30
40
50
30.5
46.9
18.8
3.8
Up to €10bn €10–15bn €15–20bn €20bn+
Question 5:What has been the greatest infl uence on secondary market liquidity in 2014?Buyside appetite has undoubtedly supported secondary loan pricing through a more volatile second half of the year, and the strong investor appetite tops respondents’ returns for directional infl uence also on liquidity this year. Primary deal fl ow will always be a factor but results here point to there being more (or bigger) mouths to feed.
Perc
enta
ge
0
14
28
42
56
70
24.7
5.110.1
60.1
Increased primary
deal flow
Settlement
times
Transferability
restrictions
Increased investor
appetite
Question 6:What affects settlement times the most in the current market?KYC requirements and related delays have had a negative impact on secondary settlement for some time and are now singled out by respondents as the key problem. Agent related issues, which would necessarily include processing delays such as transfer freezes, are perhaps less of an issue, as may have been suggested during the secondary session at the LMA Syndicated Loans Conference in September.
Perc
enta
ge
0
8
16
24
32
40
15.8
27.8
18.7
37.7
Agent related
issuesPre-trade diligence
(by buyers/sellers)
Consent
related delays
KYC issues
Question 7:What are your expectations for the secondary market in 2015?In line with survey results last year, most respondents see the secondary demand versus supply imbalance continuing into 2015, with trading more deal specifi c than broad-based. Auction volume in 2014 has been on a par with last year (according to LCD) and is predicted to be a factor again next year.
Perc
enta
ge
0
10
20
30
40
50
27.3
44.9
17.010.8
Increased buyside
appetite and
increased primary
flow will lead to
higher volumes
and greater liquidity
Buyside appetite not
matched by primary
supply: liquidity is
deal specific, focus
on bespoke trades
and auctions
Steady risk appetite,
volumes flat to lower
on bespoke trading
only
Selective risk appetite
only, volumes lower
with limited liquidity
48Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
79.9% of respondents believe it will be the non-banks who will demonstrate the greatest growth in real estate lending in 2015.
LMA members’survey: Outlook for the syndicated loan market in 2015Continued from page 37
Question 8:In fi ve years’ time what will be the change in market share in volume terms of non-bank fi nance in the loan market?85.5% believe that there will be at least a moderate or signifi cant increase in non-bank fi nance over the next fi ve years. This refl ects the regulatory drive to encourage the provision of credit away from the banking market and source funds from other providers.
Perc
enta
ge
0
12
24
36
48
60
32.7
52.8
11.3
2.6 0.6
Significant
increase
Moderate
increaseNo significant
change
Moderate
decrease
Significant
decrease
Question 9:What do you think is the principle barrier to developing market lending at the present time?There are two clear barriers preventing the development of lending into emerging economies, according to respondents: legal uncertainty and inconsistent regional integration. Whilst these are obstacles that require a substantial amount of time and effort to overcome, they are at least issues which national governments can seek to tackle and overcome, suggesting that investment will increase considerably if they were to be addressed.
0
8
16
24
32
40
28.032.2
9.9 11.6
18.3
Perc
enta
ge
Inconsistent
regional
integration
(e.g. regulation)
Legal uncertainty
e.g. enforcement
of security;
retrospective
legislation
Poor skill-set
of borrowers/
sponsors and
lack of expert
advisory services
Lack of historical
investment data/
track record
Black swans
e.g. sanctions,
disease, terrorist
activity etc
Question 10:What do you think is the primary factor driving developing market investment at the present time?It is perhaps unsurprising that the search for yield continues to drive investment into developing markets, with over two thirds of respondents citing this as the primary factor governing their decision to lend into emerging economies. 0
14
28
42
56
7061.7
13.6 14.16.6 4.0
Perc
enta
ge
Search for yield Return of
international
investors to the
market
Demographic
and/or economic
potential
Improved
standardisation
of documentation,
processes etc
Increased
availability of
risk mitigation
products
49Asia Pacifi c Loan Market Association
APLMA News
Winter 2014
Question 11:Where do you think Europe currently is in the property cycle?In a commercial real estate market which is becoming increasingly competitive, it is positive to see that 26.6% of respondents believe the European property cycle is entering a period of stabilisation. However, there is obviously still work to be done in promoting liquidity, with 25.8% of respondents believing the European property cycle is in a period of recovery.
0
6
12
18
26
30
25.8
18.8
12.4
16.4
26.6
Perc
enta
ge
Recovery Expansion At the peak Contraction Stabilisation
Question 12:Which lending ‘source’ do you think will demonstrate the greatest growth in real estate lending in 2015?There has been a clear shift in the composition of investors active in the real estate fi nance market in recent years. It may therefore not be surprising that 79% of respondents believe that it will be the non-banks who will demonstrate the greatest growth in real estate lending in 2015.
0
8
16
24
32
40
21.0
32.4
15.519.9
8.2
3.0
Perc
enta
ge
Banks Debt funds Insurers Pension
funds
Sovereign
wealth fundsOther
APLMA Global Loan Market Summit
The APLMA Global Loan Market Summit will be held on 3 - 4 February, 2015 at the Hong Kong Conven on and Exhibi on Centre, Hong Kong.
Every year, over 350 delegates a end this Summit. Global heads of loan syndica ons of some of the world's leading banks will share their insights into key trends and develop-ments in the loan markets for the coming year.
Sponsorship Opportuni es are available. For details, please contact: [email protected].