Corporate Financing Analysis - Australian Syndicated Loan Activity On The Rise - 09 FEB 2015
According to data provider Dealogic, Australia syndicated loan activity increased for the second consecutive year to USD133.7bn in 2014, up 13% from USD118.7bn issued in 2013. Only during the 2008 full-year period, when loans worth a combined USD135.3bn were issued, have borrowers been so active. Within this, club loan volume reached a record USD79.1bn last year, up by 33% on the 2013 level (USD59.3bn). In addition, average deal size came out at USD643mn, the highest annual level since 1998 when it stood at USD710mn thanks to banks working together on deals.
In terms of the sectors securing loans last year, the real estate industry led the way with USD28.1bn, up 64% y-o-y from USD17.2bn in loans recorded in 2013 and the highest full-year level on record. Such credit was secured to an industry currently characterised by a rapid rise in property prices, a renewed pickup in mortgage lending, and strong commercial property construction. In BMI's view, there is potential for rising property prices to support continued construction growth over the coming quarters, as well as to provide a boost to private consumption. After real estate, the utility & energy sector was next up in the rankings, securing USD18.4bn from lenders. Despite Origin Energy's bumper USD6.1bn loan inked in December 2014 - the largest Australian loan in the sector on record - activity was down by as much as 19% from USD22.8bn lent in 2013.
2015: Building Momentum
|Australian Full-Year Syndicated Loan Activity by Deal value, USDbn (2005-2014)|