1、Trade Finance Syndications,Our expertise Powering your ambition,14th April 2009,2,Disclaimer This presentation has been prepared by Standard Chartered Bank (“SCB”) for restricted distribution. Neither SCB nor the distributors nor any of its affiliates and/or their directors, officers, employees shal
2、l in any way be responsible or liable for any losses or damages whatsoever which any person may suffer or incur as a result of acting or otherwise relying upon anything stated or inferred in or omitted from this presentation.This presentation is for information purposes only and is based on informat
3、ion available to the public from sources that SCB believes to be reliable, but no representation is made that it is accurate or complete, and no information herein should be relied upon as such. Opinions and projections found in this presentation reflect our opinion as of the presentation date and a
4、re subject to change without notice. This presentation is neither intended nor should be considered as an offer or solicitation, or as the basis for any contract, for purchase of any security, loan or other financial instrument.,3,Syndications,Life is not the same anymore: Banks in trouble Capital i
5、s scarce Basel II is limiting scope of operations Return on Assets and Return on Equity are at the forefront of the lending decision Volumes are down Pricing is upOptions are limited: Leverage & Mezzanine are dead Hedge Fund involvement in the market is waning Underwriting capacity is scarce due to
6、decrease in retail investors / risk appetite & capital US/Europe seeing maximum tenor decreasing to 1-2 years. Non-Performing Icelandic / Russian / Eastern European assets eating up excessive amounts of capital due to Basel II requirementsYet deals are still being done,4,Banks in Trouble,Lehman Brot
7、hers = GoneABN AMRO = RBS / Fortis / SantanderRBS / Fortis / Lloyds / Citi = Part NationalisedMerrill Lynch = Bank of AmericaBear Stearns = JP MorganSubprime / CDOs / RMBS / CMBS have destroyed balance sheetsWritedowns have lead to massive losses eroding years of retained earnings and resulting in e
8、xpensive bailoutsThe future is uncertain!,5,Capital is Scarce,New World: Liquidity is tightWritedowns eat away at capital lowering lending capabilitiesBalance Sheets are weighed down by past lendingReversion to home marketsUpward re-pricing of risk due on the grounds of credit and liquidityRights-Is
9、sues Done with varying degrees of success,6,Basel II,7,Volumes are Down:,8,Pricing is Up:,9,Leverage is Dead,10,Loan Syndication,Yet deals are still being done,11,Success in Europe,Trafigura: $520m, 27th March 09, 1 year RCF, 250bp (All-in) Up from 80bp in 2008 ED&F Man: $1,251m, 17th Feb 09, 1&2 ye
10、ar RCF, 350/412.5bp (All-in) Up from 85/105bp in 2008 Stemcor: - $400m, 31st March 09, 364-Day, L+350bp (All-in) Up from 155bp in 2008WHY? These transactions are trade or commodity related Short tenor Well priced (approx 3x previous years all-in pricing) Have strong relationships with banking group
11、Are self-liquidating,12,Failure in Europe: Lending alone is not attractive anymore,Central & Eastern Europe: Only 1 successful syndication in H2 2008 Out of 31 Financial InstitutionsWhy? Lack of relationships & ancillary business Deterioration of credit (Sovereign / Corporate & FI) Went to the marke
12、t for USD when Costs of Funds where very high Yield driven participation played a large part in previous financing Result: Eurozone Banks have over $1.5 trillion of exposure to Central and Eastern Europe. Erste, RZB, Soc Gen, UniCredit & KBC who were all active players in the loan market, have the m
13、ost substantial known exposures. National Focus: Banks are pulling back within their borders and focussing on core corporate client e.g RBS, Commerzbank Iceland: The collapse of Landsbanki & Kaupthing lead to the country defaulting,13,Failure in Europe: Name alone does not sell anymore,Porsche - 10b
14、n, 24th March 09, 1 year RCF, L+575bp All-in (Implied Rating BBB):Drew down RCF in 2008 priced at L+45bp (All-in) when Lenders Cost of Funds where greater than L+100bp, which angered Lenders. Went to the market in Feb 2009 to raise 12.5bn, 10bn to refinance and an additional 2.5bn for General Corpor
15、ate Purposes (GCP). Initially offered L+475bp and was shortly afterwards forced to increase fees by 50bp to attract Lenders. Only managed to raise 8.55bn as of the day before repayment date. Increased margin by a further 50bp and managed to secure 10bn for the refinance but not additional 2.5bn for
16、GCP. Had to secure the facility with shares in Volkswagen (2008 RCF was unsecured). Technically Defaulted as repayment of Existing Facility was a day late.As a result, Porsche paid 10x the price of their previous transaction & had to provide security as they misjudged the market!,14,Bonds Prices and
17、 Dangers,Borrowers are being forced into Bond Market due to lack of medium term liquidity in the Loan Market.High priced bonds lock-in high financing costs without prepayment flexibility of loans.Recent Issuances: Volvo (A-) 5 year EUR 700m 987.5bp (2007 10yr EUR 1,000m 500bp) BMW (A) 4 year EUR 100
18、m 800bp (2005 4yr EUR 400m 300bp) BMW (A) 3 year EUR 1,250m m/s+387.5bp (2007 3yr EUR 100m m/s+5bp) Metro (BBB+) 6 year EUR 1,000m 762.5bp (2004 5yr EUR 750m m/s+40bp) Daimler (A-) 3 year EUR 1,000m 687.5bp (2007 3yr EUR 2,000m 437.5bp) EDF (AA-) 10 year EUR 2,000m 650bp (2006 10yr EUR 1,000m 412.5b
19、p)Bad market conditions + increased borrowing costs = increased price = Decreased Demand,15,LIBOR / Cost of Funds / Liquidity Premium,While 3mth USD & EUR LIBOR are at near record lows 1.16% (USD) / 1.47% (EUR), this doesnt reflect the full story.By virtue of the LIBOR fixing mechanism at least 4 of
20、 the 16 banks on the USD panel should be willing to lend at below the published rate and 4 at the rate. However Cost of Funds are greater than LIBOR.The difference is the liquidity premium banks need to pay to published LIBOR Rates. No Lender will tell a Borrower their Cost of Funds out of fear of t
21、he associated stigma of being considered a “weaker credit”.As long as Cost of Funds LIBOR, Margins will need to be higher to compensate for the liquidity premium.Cost of Funds premium is less of an issue in Euro and GBP transactions.,16,The Credit Decision,The decision historically relied on just 3
22、questions: Can we lend to this Borrower? How much can we lend to this Borrower? How long can we lend to this Borrower for?Now these 3 questions have been joined by: How is this deal priced in comparison with similar deals? How does it look under Basel II? Whats the Return on Assets? Whats the Return
23、 on Equity?Result: Increased Pricing / Lower Tenor / Tighter Covenants,17,Risk Weighted Asset (RWA),Under the Basel II Advanced IRB method, an International Banks participation will be partially dependant on return on RWA.A $100m fully-drawn loan with no collateral for a company with an internal rat
24、ing equivalent to B+ would have a RWA of $160-190m for 1 yearA $100m undrawn Revolving Credit Facility under the same conditions would maintain the same RWA%, however this is only applied to 10% of the committed limit i.e. $16-19m for 1 year.A $100m fully-drawn loan with $100m of hedged Crude Oil as
25、 collateral with the same internal B+ rating would have a RWA of $30-40m for 1 yearResult: The higher the RWA, the higher the pricing to meet internal return constraints,18,Ancillary Business,Ancillary Business has (for a long time) been a reason for participating in underpriced syndicated loans. Lo
26、sses from Secondary sell-down could be offset against revenues generated from other aspects of the relationship.This has led to Financial Institutions / Corporates in certain markets being able to borrow at unrealistic prices.While these relationships are still highly valued, facilities now need to
27、make sense on a standalone basis:Price, Tenor, Return on Assets, Return on Capital, Cost of Funds etc.,19,Covenants,Covenant-light started appearing in corporate syndications in 2006, partly due to the strength of private equity firms and partly due to almost unending liquidity. Covenant-light loans
28、 relaxed the protection and corresponding reporting of key ratios (Gearing, EBITDA, MAC etc).However covenants remained tight in Africa not to the detriment but the benefit of the overall market.,20,Africa why is it different?,2008 was a record year for AfricaReal Deals sensible deals with substance
29、: Telecoms, Energy, Mining etc Sonangol ( Receivables backed) USD 2,500m Ghana Cocoa Board( Receivables backed) USD 1,000m AngloGold (Commodity Corporate) USD 1,000m Lonmin (Commodity Corporate) USD 400mMaturities Africa is the only place where 3-5 years is still marketable for Corporates. For FIs w
30、hile commercial lenders may only offer 1 year, DFIs are willing to do up to 5 years.,21,Advantages of Local Currency Facilities,Local currency markets have the depth to accommodate larger facilities.Utilise the greater liquidity in local currency markets.With high EUR & USD loan pricing, local curre
31、ncy could be the cheaper option.SCB is present in Africa and can assist you with this.A few examples from 2008: Syndicated Loans: Celtel Tanzania, Kenyan Power & Lighting Corporation, Telkom Kenya Debt Securities: Union Bank of Nigeria, Blue Financial Services Botswana, African Development Bank (UGX
32、 Note),22,Africa - The Knock on Effect :No one is an island,Decrease in Non-African Banks participating in African Facilities due to focus on core corporate clients.In 2006-Q108, 164 Non-African FIs participated in US$/EUR African Deals. In the last 12 months.only 47!Decrease in players partially du
33、e to mergers and nationalisationKBC / HSH / ING & Landesbanks in Germany are out of the international marketA number of International Banks are moving away from FIs,23,Africa is still open for business,SCB is still with you, as are certain other banksDevelopment Finance Institutions:, African Development Bank, African Export Import Bank, FMO, DEG, KfW, Proparco and of course IFC.Opportunities in Energy, Mining, Commodities & Financial InstitutionsThe Global Market is tough, but Africa can emerge stronger than ever.,
