* First half EMEA total of $ 434 billion, 6% less than last year
* Emerging market lending lowest since 2009
* Leveraged credit volume at ten-year high
LONDON, June 28 (Reuters) – Syndicated loans in Europe, the Middle East and Africa (EMEA) totaled $ 434 billion in H1 2016, down 6% from H1 2016 as lending to borrowers in the Emerging markets in the region hit an eight-year lows, Thomson Reuters LPC data shows.
The first-half volume in Central and Eastern Europe, the Middle East and Africa was just $ 52.9 billion – the lowest figure in the first half since 2009 and significantly lower than the same period last year of $ 125.4 billion Dollar.
The decline was largely due to a huge drop in borrowing opportunities in the Middle East – the volume plummeted from $ 43 billion in the same three months of 2016 to $ 6.5 billion in the second quarter.
“Everything is slow right now,” said a Middle East-focused credit banker.
With a volume of US $ 273 billion in the first half of the year, refinancing remains the main driver of activities in EMEA. That was 28% more than a year earlier, as many companies took advantage of the high market liquidity and extremely low interest rates to modify and extend existing loans.
The largest refinances in the second quarter included the $ 7.335 billion refinancing of the global diversified natural resources company Glencore, which came in at $ 3.5 billion.
A handful of large acquisition loans earlier in the year helped drive M&A lending volume to $ 132 billion in the first half, up 41% from a year earlier, but acquisition funding became patchy in the second quarter.
The Italian motorway group Atlantia placed the largest M&A financing of the second quarter with a loan of € 14.7 billion to support the planned takeover of the Spanish company Abertis. The loan was completed in May with a group of 24 international banks.
Despite spikes in mergers and acquisitions and refinancing, lending to Europe’s prime borrowers declined 12% to $ 235 billion at the halfway point as broader macroeconomic and political issues weighed on it.
“There was a lot of uncertainty to deal with. An ongoing round of European elections, the ongoing drama of Brexit, Donald Trump and North Korea – it’s no wonder the volumes have hit, “said a senior loan banker. TEN YEARS HIGH Leveraged loan volume in the first half of the year was $ 133 billion, two-thirds higher than the same period last year as refinancing, price adjustments and recapitalizations flooded the market.
As borrowers used the available high liquidity to improve portfolio companies, the volume reached its highest level since 2007.
The ten-year high means that the first half of the year has reached nearly three-quarters of last year’s total annual volume of US $ 182.73 billion for European leveraged loans.
$ 118.4 billion in non-event-driven funding accounted for a massive 88.8% of all leveraged loan activity in the first half as borrowers sought dividends, revalued debt on better terms, extended maturities, and more Improve documents as there were no buyout deals.
Buyout loans stood at $ 14.88 billion, its lowest level since 2014 as sponsors struggled to compete for assets against high valuations and wealthy strategic bidders.
A term loan of 1.33 billion in support of the take-private of Hong Kong-based international school operator Nord Anglia.
The pipeline of new deals is building, which should bolster event-driven volumes in the third quarter. These include loans for the Danish packaging company Faerch Plast; French nursing home company DomusVi; Holland & Barrett, a UK-based health food and dietary supplement chain; Cleaning and Chemical Systems Business Diversey Care; and the takeover of the laboratory supply company VWR Corp. by the US life science company Avantor.
“There is a sufficient pipeline of deals to start and a good potential pipeline of future deals, but not enough to meet demand,” said a head of leveraged finance.
A term loan of 1.95 billion closed the business after a failed takeover attempt.
Bank of America Merrill Lynch led the way with a market share of $ 23.74 billion. HSBC came in second with $ 22.89 billion and 83 deals, while Deutsche Bank came in second with a market share of $ 22.64 billion and 58 deals took third place.
Additional coverage from Sandrine Bradley; Adaptation by Christopher Mangham