Loan Bankers Hope For Better Flow

Syndications officials expect a boost in LatAm loan activity in Q4, after a very dull 2010 compared to previous years. However, borrowers still prefer to tap the bond market and total loan volume looks set to fall well short of 2009, barring any M&A-related surprises. “Lending activity will definitely be more intense than in the first half of the year, there are a lot of bidding processes that are set to conclude,” says one syndicate banker. The region had seen 72 deals through August 23, for a $17.71bn volume, according to Dealogic. This compared to 83 for $25.28bn in the corresponding period of 2009, which was thin versus prior years. Companies needing to raise debt have taken advantage of extremely positive conditions in the bond markets, leaving syndications officials twiddling their thumbs. Nonetheless, the tone appears to be improving. “People are more optimistic on the loans market than they have been in a long time,” says the loans banker. “Banks are very hungry and still searching for activity,” says another, noting that lenders are under increasing pressure to make budgets as year-end approaches. However, they are still faced with limited returns and increasingly vigilant credit committees. “Pricing won’t drop below 200bp, unless deals are over 7 years,” says the second banker. And deals for more than $3bn-$4bn will require participation from European banks, which suffer liquidity problems and elevated funding costs. Only Brazilian banks would be in a position to offer loans at lower spreads, say New York-based lenders. Peruvian and Mexican institutions are also heard offering cheap bi-lats to favored clients, and Chinese money is said to be ubiquitous. Despite this, there are several financial institution syndications in the pipeline, and corporates are also gearing up to take out loans, according to bank market participants. For the year to date, Banco Espirito Santo sat atop the league tables, with a $987m volume from 4 deals, according to Dealogic, fol