SYNDICATED lending in Asia Pacific (excluding Japan) scaled new heights in 2014 to US$523 billion as demand from Chinese companies continued to increase despite an economic slowdown, helping regional loan volumes surge 13 percent higher than the US$462 billion clocked in 2013.

    Loan activity created history with volumes crossing the US$500 billion mark, quite remarkably in a short period of time since the 2008 global financial crisis. At the start of the millennium loans transacted in Asia (ex-Japan) totalled US$110 billion and only breached the US$200 billion mark in 2006.

    In a repeat of the previous year, China set the bar higher with loan volumes in 2014 reaching US$141.31 billion, a 20 percent increase over 2013. Hong Kong continued to benefit from China-related deal flow with loan volumes hitting a record of US$92 billion as Chinese borrowers propelled borrowing activity nearly 15 percent higher year on year.

    Increased volumes in China boosted North Asian numbers to US$276 billion, around 13 percent higher than US$244 billion in 2013. Outbound M&A loans, project and infrastructure financing in China accounted for the bulk of the transactions in 2014.

    “China will continue to throw up acquisition financing opportunities that will drive loan volumes up, in North Asia,” said Aditya Agarwal, head of loans, Asia at Royal Bank of Scotland.

    Others agreed pointing out that M&A financing activity could increase over the next year.

    “Given the significant drop in oil prices, we expect some M&A and related financing opportunities to arise from the oil & gas and ancillary industries sector,” said Ashish Sharma, head of loan syndications, Asia Pacific, at Credit Suisse.

    M&A activity accounted for more than 11 percent of Asia Pacific (excluding Japan) loan volume in 2014, at US$57.1 billion via 42 deals. (SD-Agencies)