Magazine article American Banker

Syndications Set Mark, Though Down from 4Q

Magazine article American Banker

Syndications Set Mark, Though Down from 4Q

Article excerpt

Despite early indications of a slow first quarter in syndicated lending, market volume totaled $189 billion, down 29% from the previous quarter but still the market's busiest first quarter ever.

Bankers expect syndicated lending activity fueled by mergers and acquisitions to pick up significantly in the second quarter, putting the market on track for another record year.

But it was larger, less profitable investment-grade deals that drove up first-quarter volume. The number of deals fell about 25% from the fourth quarter, according to market sources.

"Investment-grade clients recognized an increasingly competitive bank loan market and responded with very large transactions which were all very well received by the market," said Michael H. Rushmore, head of loan syndications and trading research at BA Securities Inc., a unit of BankAmerica Corp.

The largest deals of the quarter, according to Loan Pricing Corp., were New Center Asset Trust's $12.1 billion credit for General Motors Acceptance Corp. and IBM's $10 billion loan.

"Most of the volume was refinancing by very large-cap public companies," said Peter Gleysteen, a managing director at Chase Securities Inc. "Indeed, we probably had an all time low of acquisition and leveraged finance. At the same time, market capacity for leverage business built up to record levels precisely at a point in time when there was almost no deal flow."

Chase Manhattan Corp. topped the syndicated loan rankings as expected, with an agent volume of $73.6 billion on 114 deals and a 19% market share.

BankAmerica Corp. remained in second place on the agent-only list, with $54.4 billion from 85 deals, for a market share of 14%. J.P. Morgan & Co., with $44.8 billion from 45 deals and a market share of 12%, was third.

Citicorp's volume of $26.8 billion was less than half the previous quarter's, and the bank slipped to fifth place, from third. …

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