Syndicated loan volume down in Australia but up in Asia

In one measure of the liquidity in Asian capital markets syndicated loan volumes are up over 50 per cent, year on year, at US$111 billion over the first half of 2010, industry publication, basis point, reported. The data relates to loans made in Asia but excluding Japan.

Deal flow has increased to more than 360 loans closed and completed, from 272 for first half 2009.

The improved trend in the data was expected, after strong openings to the year in Hong Kong and Taiwan, and overall stability in Asian markets. But while volumes have strengthened, geographical weakness remains, according to basis point.

The traditionally strong markets of Australia and Singapore continue to underperform.

Usually the largest regional loan market ex-Japan, Australia is down as much as 54 per cent from its record of US$40.5 billion in the first half of 2008. This may be a function of successful bank efforts over the course of 2009 to persuade customers to refinance early, and to also pay higher margins, but heading off refinancing risks as well.

Tightening monetary policy measures in China have also cut first half volumes by as much as 76 per cent year on year.
 
Overall volume based on preliminary numbers remains 17 per cent below the record of US$134 billion recorded in the first half of 2008.

basis point also notes that Asian loan pricing fell dramatically over the last 12 months, as lenders chased a thin supply of deals. But with nervousness emanating from the euro zone crisis and many banks facing higher funding costs, loans bankers say the pricing slide has halted for now.