Lenders Push for Wider Margins

Banks that participate in loan syndications are demanding juicier margins as their cost of deploying funds increases. Syndications that were launched in December have been the biggest victims of the changing market and have had to flex up pricing to draw in potential lenders. Both Cencosud and Banco de Credito del Peru have repriced their deals of $480m and $300m respectively by 15bp-20bp, depending on the credit and tenor. Those transactions are heard to have garnered interest from banks once the price was adjusted, say bankers on the deals. More recently, Brazil’s Unibanco went to retail at new pricing levels with a $250m facility that may include up to five tranches. A 2-year trade piece now pays 50bp over Libor; a 3-year trade offers 60bp over, and a 5-year trade is offering 105bp over. The deal also includes two working capital tranches that now pay 80bp over Libor for two years, and 115bp for five years. Pricing on the deal moved up10bp on the short-dated tenors and 30bp on the longer tranches. Banks considering participating on the Unibanco loan reportedly demanded better pricing when earlier this month Usiminas sprung a $1.2bn loan on the market that included a 5-year trade piece at 110bp. That forced other deals in the market to match with comparable pricing if they hoped to compete with the large, investment grade deal. Standard Chartered and WestLB are leading the Unibanco transaction, while HSBC is leading Usiminas. Many banks are also saving up to participate in an expected $50bn loan from Brazil’s Vale, which may be launched in the coming weeks at significantly richer margins.