The Syndicated Loan Market
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The Syndicated Loan Market
- 1. The Syndicated Loan Market definitions and sizing Russia and Europe’s experience Transforming the Syndicated Loan Market March 14, 2010 – Page BWBB 5043: Credit and Syndicated Loan Management PREPARED FOR: CIK JULAILA JOHARI PREPARED BY: Hajaj S. M. Foujo 801468 Ahmed K. M. Madi 801131 Hocine Boughezala Hamad 802042 Bannapov Feruzbek 805873
- 2. May 2006 – Page contents Transforming the Syndicated Loan Market Conclusion 2 3 4 Syndicated loan market in Europe &Russia Overview of syndicated loan 1
- 3. - Definition and sizing - vision syndicated loan market - characteristics of old and new loan market May 2006 – Page Overview of syndicated loan
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- 12. A typology of syndicated loan March 14, 2010 – Page
- 13. Sample CLO transaction structure March 14, 2010 – Page
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- 15. May 2006 – Page Sources :Syndicated Finance ING Bank London Syndicated loan market in Europe &Russia
- 17. Emerging Europe Russian Federation Poland Slovakia Hungary Lithuania Latvia Estonia Belarus Ukraine Moldova Kazakhstan Kyrgyzstan Uzbekistan Tajikistan Turkmenistan Georgia Romania Bulgaria Turkey Dissecting the market Turkey March 14, 2010 – Page EU CEE Czech Republic Estonia Hungary Latvia Lithuania Poland Slovakia Slovenia Non-EU CEE Albania Bosnia and Herzegovina Bulgaria Croatia Macedonia Romania Serbia and Montenegro Russia and CIS Russian Federation Armenia Azerbaijan Belarus Georgia Kazakhstan Kyrgyzstan Moldova Tajikistan Turkmenistan Ukraine Uzbekistan Russia and CIS Azerbaijan Croatia Czech Republic Bosnia-Herzegovina Serbia and Montenegro Albania Russian Federation Slovenia Macedonia Armenia
- 18. Russia and CIS vs Europe Gross Domestic Product (GDP) per capita, PPP Source: CIA World Fact Book EU EU CEE Non EU CEE Russia and CIS March 14, 2010 – Page
- 19. Syndicated loan market vs Eurobond market volume 2004 2005 2004 - 2005 Source: Dealogic Loanware & Bondware March 14, 2010 – Page
- 20. Syndicated loan market volume 1996 – YTD 2006 Source: Dealogic Loanware, ING analysis March 14, 2010 – Page
- 22. Russia & CIS transactions Average maturity 1996 - YTD 2006 Longer maturity of transactions Larger number of deals with a maturity of more than 10 years, but still under ECA/EBRD or IFC conditions Russia – tenor for non-structured loans is usually 1-3 years, with 5 years tested last year for Gazprom and Russian Railways, followed by Rosneft and MTS State-owned banks are able to borrow for up to 3 years (Russia - VTB, VEB, Sberbank; Kazakhstan – KKB, BTA) March 14, 2010 – Page
- 23. Russia & CIS transactions Average margin 1996 - YTD 2006 Borrower’s market Pricing under increasing pressure Margin for state-owned borrowers sets the direction for the market Margin spread between private and public types of borrowers has grown since 2004 March 14, 2010 – Page
- 24. Syndicated loan market volume Note: Multilaterals – financing where country risk is mitigated by involvement of multilateral agencies (EBRD, IFC, OPIC, ECAs, etc.) Source: Dealogic Loanware May 2006, ING Bank Russia 1996 - May 2006 Transactions becoming less structured Oil and gas sector deals are still dominant Shift to corporate deals from traditional trade finance deals Increase in unsecured deals Unsecured lending allowed borrowers form wider industries to access the syndicated loan market Unlike 2004, in 2005 unsecured deals - RNG US$7.5bn, Gazprom US$972m, Sberbank US$1000m and Russian Railways US$600m - were among the biggest In Russia within the US$44.6bn total volume, unsecured deals accounted for almost US$16bn, exceeding the total aggregate volume of the market in 2004 Domestic currency earners entered the market March 14, 2010 – Page
- 25. Russia: Comparable transactions Source: Dealogic Loanware Feb-06 May 2006 Apr-06 Feb-05 May-2006 US$2,000m US$1,526m US$1,330m US$1,000m US$600m General Corporate Working Capital General Corporate 5y 4y 3y/5y 9m 3y 65bps 55bps 37.5bps Trade finance , Debt Repayment Refinancing 55bps 80bps / 100bps y1-3,115bps y4-6 Oct-05 May-05 Sep-04 Nov-05 US$2,000m US$972m US$600m US$500m Debt Repayment 5y 3y3m / 5y 3y 3y 180bps 125bps / 150bps General corporate 70bps Rosneft OAO Gazprom OAO MTS TNK-BP VTB Gazprom OAO MTS TNK-BP 250bps Rosneft OAO Trade finance , Debt Repayment Trade finance , Debt Repayment Apr-05 US$450m 3y Trade Finance 120bps VTB 2004-2006 March 14, 2010 – Page
- 27. Why do we keep doing it? Difficult deals still get done 1. Returns still attractive Internal return models adjusted Countries’ risk upgraded Still existing premium over Western Europe / other emerging markets 2. Additional income Currency conversion Account opening / Deposit / Overnight placement 3. Follow up transactions Refinancing Positioning for more attractive business, e.g. larger and more lucrative M&A 4. Access to Group companies Subsidiary / affiliate finance Similar companies in the sector 5. ‘Turf’ war Client defining exercise Defensive – protect existing client relationship Aggressive – client winning exercise Market share League tables Credentials Future business in the country/region Future business in the sector 6. Spin-off opportunities ‘ Pay to play’ Investment banking/corporate finance/debt and equity capital markets Cash management Payroll solutions Staff benefits March 14, 2010 – Page
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- 43. Thank you for attention March 14, 2010 – Page Questions ?
Notas del editor
- A syndicated loan is provided to the borrower by a group of banks. The arranging bank is appointed by the borrower, after negotiating terms and conditions with the borrower. It is then the arranger’s responsibility to market the loan to other potential bank lenders, and to obtain commitments from sufficient banks to provide the amount of finance required by the borrower. Each bank in the group may commit a different amount, but will receive a higher fee for a higher commitment. The arranging bank normally acts as agent and negotiates the documentation, which is principally a single loan agreement be signed by all the lenders. The agent will then act as the interface between the borrower and the lenders during the life of the loan, so that the borrower only has to deal with one bank for drawdowns, repayments and any alterations to the loan. An important advantage of a syndicated loan is that its structures can accommodate a great variety of possibilities, and can match a borrower’s funding requirements more closely than is possible with other financial instruments.
- A syndicated loan is provided to the borrower by a group of banks. The arranging bank is appointed by the borrower, after negotiating terms and conditions with the borrower. It is then the arranger’s responsibility to market the loan to other potential bank lenders, and to obtain commitments from sufficient banks to provide the amount of finance required by the borrower. Each bank in the group may commit a different amount, but will receive a higher fee for a higher commitment. The arranging bank normally acts as agent and negotiates the documentation, which is principally a single loan agreement be signed by all the lenders. The agent will then act as the interface between the borrower and the lenders during the life of the loan, so that the borrower only has to deal with one bank for drawdowns, repayments and any alterations to the loan. An important advantage of a syndicated loan is that its structures can accommodate a great variety of possibilities, and can match a borrower’s funding requirements more closely than is possible with other financial instruments.