Reuters: Private Equity: RLPC-Loan syndication jobs at risk as lending falls

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RLPC-Loan syndication jobs at risk as lending falls Jun 15th 2012, 15:22 Fri Jun 15, 2012 11:22am EDT * Lending sinks below quiet first quarter * Loan market remains open but nervous By Tessa Walsh LONDON, June 15 (Reuters) - Loan syndication jobs could be at risk as bank lending in Europe falls, with deal count at its lowest in any quarter since mid-1996. "We need more deals to justify the scope of teams," a senior banker said. "The question is, will this result in the slimming down of the loan syndication market?" Loan volume and deal flow have been hammered as banks have moved to increase tier one capital ratios, under pressure from regulators, a n d companies have been deterred by weak debt markets. Second-quarter volume for Europe, the Middle East and Africa of $128 billion is languishing at a 13-year low, with only two weeks left in the quarter, and is 16 percent lower than an already low first quarter, Thomson Reuters LPC data shows. The second quarter is usually one of the busiest periods of the year, but deal flow is 49 percent lower, with heavy drops in activity from the first quarter in Western Europe, the Middle East and Africa. Central and Eastern Europe is the only region to see an upturn in activity in the second quarter so far, with a 44 percent increase in volume to $11 billion. The main issue facing lenders is lack of demand. "It's all about low volume, there's just no opportunities. The overriding factor at the moment is the lack of flow and the major issue is getting deals in," a loan syndicate head said. Many companies have already refinanced loans and now favour raising longer-term funding from a more predictable bond market, while stock market volatility is putting them off raising new loans for mergers and acquisitions. Despite this, all the loans launched so far in 2012 have sold well, thanks to pent up demand created by the lack of deals. Large loans still being syndicated for highly rated investment-grade companies and riskier "junk-rated" companies are finding support from the market. Despite the intensifying eurozone crisis, Italian gas distributor Snam has launched a wider syndication of an 11 billion euro loan to fund its demerger from Eni which has already attracted 11 banks. A large 1.8 billion buyout of German bandages maker BSN Medical by private equity firm EQT was completed in early June. "From a borrower's perspective, liquidity looks great. But banks have more fundamental problems than deals written this year would suggest," the syndicate head said. (Reporting by Tessa Walsh; Editing by David Goodman) Link this Share this Digg this Email Reprints

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