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Wednesday, 16 January 2019

China Loan House

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Standard Chartered continued to bring debut borrowers and first-time investors to the syndicated loan market in 2016, avoiding the squeeze in pricing as other lenders succumbed to a flight to quality.

Instead of playing safe, StanChart focused on more complex deals and smaller borrowers, while still playing its part on the high-profile transactions.

“We focused our efforts on leveraging our strong onshore/offshore platform, focusing on clients in need of solutions and transactions where Standard Chartered could add value through innovative structuring and by attracting broader market liquidity, whilst avoiding situations where we were required to compete solely on pricing,” said Julia Chou, regional head of loan syndications for Greater China and North Asia.

An increased US$194.5m three-year revolving credit for Comtech International Hong Kong, a unit of Chinese e-commerce company Cogobuy, and a US$180m two-year amortising term loan for China XD Plastics’ Xinda Holding (HK) highlighted the bank’s pursuit of innovation and its impressive distribution capabilities.

It acted as the sole MLAB, facility and security agent on both the Cogobuy and XD deals and brought in nine first-time lenders for Cogobuy and six new banks for XD.

In these and other deals for repeat borrowers, Standard Chartered showed its understanding of Chinese investors’ needs, covering multiple mainland branches, offshore banking units and European branches.

In a US$750m dual-tranche loan for repeat borrower Baoxin Auto, Standard Chartered brought on board Bank of China Paris branch and China Merchants Bank London branch. The deal also included Bank of Jiangsu, Industrial Bank and Hengfeng Bank, all relatively new names to the syndicated loan market.

This was StanChart’s first sole mandate from Baoxin Auto.

As well as working with first-time issuers, Standard Chartered also dared to test investor appetite for property and commodity names. To attract lenders in syndication, it embedded credit-enhancement measures into the loan structure.

Standard Chartered also featured on the year’s heavyweight deals, such as Baidu’s US$2bn debut loan in June, Tencent Holdings’ US$4.44bn five-year loan in June and another US$2.45bn five-year facility in December 2015, and Alibaba’s US$4bn five-year bullet term loan in May. Standard Chartered is not the core relationship bank for these three borrowers, but it joined at the top level next to the original MLABs.

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