Deals Intelligence with Sandy Anglin of the Deals Intelligence Team at Thomson Reuters for the week of 07-08-08
Transcript:
Hi, I'm Sandy Anglin with the Investment Banking Division of Thomson Reuters, here to bring you this week's Deals Intelligence.
Over the last year, the global economy has fallen susceptible to what has been dubbed the credit crunch, or the evaporation of cheap and easy credit. The dislocation in the market has affected many borrowers from students, to homeowners, to large corporations and private equity firms.
The volume of syndicated loans, or loans issued by banks to corporations to finance a variety of corporate purposes, fell to 604 billion in proceeds in the second quarter, a 58% decrease from the second quarter of 2007 when volume reached over 1.4 trillion dollars, and the lowest level since the first quarter of 2004, when volume was 463 billion.
Additionally, the use of proceeds mix in the second quarter, that is the purpose for which the loan proceeds are used, differed significantly from the mix in 2007. In the second quarter, refinancing accounted for 30% of total loans proceeds, the highest level since 2Q 2005 and buyout related purposes accounted for 15%, the lowest level since the third quarter of 2005.
For further comparison, in 2007, when large strategic and private equity M&A transactions dominated the media headlines on what seemed like a daily basis, acquisitions related lending activity accounted for 29% of total proceeds and refinancing, 22%.
Among the top 20 loans of the quarter, 12 deals were refinancing related. Some big-name refinancing borrowers included GMAC Mortgage, Wal-Mart, Dubai World, Morgan Stanley and UPS.
In terms of sectors, Energy and Power borrowers led with 123 billion dollars in proceeds, or 20%, Financials followed with 120 billion dollars, or slightly less than 20% of all loans, and Industrial companies accounted for the next highest share of proceeds with 86 billion in proceeds or 14% of the total.
And finally, in the second quarter issuers from the Americas accounted for 54% of syndicated lending volume, European issuers 25%, and Asian issuers 9% compared to 52%, 38%, and 6%, respectively in the same quarter of 2007.
That's it for this week's Deals Intelligence. Be sure to check back next week for more insight and analysis from Thomson Reuters.
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