Syndicated Scoop: Loans Review, Flex Pricing Increase, and More
This month's scoop: Q1-2016 loans review, an increase in flex pricing, and Asian internet firm in talks for $2bn syndicated loan
10 May 2016
By Kylie Horner and Andrew Scolnic
Intralinks for Financial Services—Syndicated Scoop is a newsletter providing a recap of the month’s top stories and insightful commentary related to the commercial and syndicated lending industry. Read on for a quick summary of this month’s Syndicated Scoop:
- Thomson Reuters Syndicated Loans Q1 2016 Review
- Syndicated lenders turning to "Flex Pricing"
- Tencent in talks for near $2 billion syndicated loan
This Month’s Syndicated Scoop
Q1 16: Thomson Reuters syndicated loans — Bank of America Merrill Lynch top
Global Syndicated lending has fallen 25% from 2015, reaching $762 billion during the first quarter of 2016, the slowest opening quarter for global lending since 2012, with just over 2,000 transactions. Acquisitions financings accounted for seven of the top 10 syndicated loans closed during the first quarter of 2016. Furthermore, Bank of America Merrill Lynch tops bookrunner rankings, with $60.7 billion from 232 transactions during the first quarter of 2016, an increase of 1.6 market share points compared to 2015. Finally, bookrunning fees from global syndicated loans totaled $2.7 billion during Q1, a decrease of 11% from last year.
Syndicated lenders turning to “Flex Pricing”
In the wake of market volatility, some banks have started building protections into loan terms in case syndications run into trouble. Under this “flex pricing,” a lead bank that commits to fund a mortgage reserves the right to increase the spread by a prescribed amount (like 10-50 basis points) if necessary, to line up enough syndicate partners.
Tencent said in talks for syndicated loan up to $2 billion
Bloomberg reported that Tencent Holdings Ltd., Asia’s biggest Internet company, will be in talks to get a syndicated loan of possibly as high as $2 billion, as it expands operations and pushes ahead with acquisitions. The Chinese firm, which operates WeChat and QQ, two instant messaging systems, is looking to make the loan a five-year facility, separate from the five-year loan of $2.45 billion it recently worked out last year. WeChat has been paced to become an all-purpose platform for e-commerce and is investing billions of dollars in startups, providing services from food delivery to movie ticketing.