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Loan Syndications Page on Bloomberg Terminal: “ANZ” + “Go” Button + Option 20

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Loan Syndications Page on Bloomberg Terminal: “ANZ” + “Go” Button + Option 20 Please visit ANZ Loan Syndications page on Bloomberg Terminal: “ANZ” + “Go” Button + Option 20 LOAN SYNDICATIONS Asian Exim Banks Forum John Corrin Global Head of Loan Syndications June 2014 Syndicated Loan Australia & NZ Asia Pacific Loan House of Syndicated Syndicated Best Loan House Best Loan House Australia & Loan House Loan House Year 2012 Corporate Loan Acquisition Finance 2012 House-2012 NZ 2013 2013 2012 House 2012 Loan House 2012 Executive Summary – Project Finance Leads Record Issuances In The Syndicated Loan Market 2 9 Strong liquidity, improved political / macro-economic situation and increasing risk appetite Overview has led to record loan activity in 2013, including record volumes for Project Finance* /Background • 2013 syndicated loan volumes in Asia Pacific (ex-Japan) closed at record USD462B, an increase of 50% over 2012 • 2013 syndicated project finance volume was at USD112.4B, across Asia Pacific (ex-Japan), an increase of 40% over 2012. • Specialised Financing saw record volumes in 2013 on back on successful closing of mega transactions 9 Infrastructure financing across Asia will continue to drive demand especially across Current Themes emerging Asian economies of China, India, Indonesia, Philippines and Vietnam • Demand across infrastructure projects has replaced the slowdown in the commodities sector • Aircraft and shipping deals continue to populate the forward pipeline as demand returns in these cyclical sectors • Larger transactions in the Oil & Gas and Energy sectors will continue to dominate deal volumes • With most banks completing their assessment of capital raising requirements in accordance with Basel III, there is increasing demand for quality assets although the slide in pricing has stemmed Outlook for 2014 9 Competition from bond and equity markets, coupled with lack of quality transactions driving up demand and pushing down pricing • Drop in 1Q2014 volumes a result of increased migration to the bond / equity markets, resulting in intense competition for new transactions leading to attractive terms for Borrowers (longer tenor, lower pricing) • Pressure on price compression seems to be abating with early signs of cost of funds pressure on Chinese / Taiwanese banks, and regulatory requirements in relation to long term funding (HKMA) • Nonetheless, increasing appetite from Japanese banks and return of European players to the Asian loan market will continue to drive liquidity for quality transaction and assist with lifting tepid transaction volumes for 1Q2014. Project Finance defined to include Project Finance, Asset Finance, Leasing, ECA Overview - Syndicated Loans How Does It Work? 4 Pre-Financial Close Post-Financial Close Borrower Borrower • Bookrunner • Documentation agent As Facility As Arranger Coordinates with Agent Lenders, helps with Debt Service their credit process Loan Lender 2 Lender 3 Lender 2 Lender 3 As Lender As Lender • Borrower will negotiate terms & conditions of the facility with • Facility will be administered by an Agent Bank (typically one one or more arranging banks (in the above example, Borrower of the arrangers) faces ANZ only) • In the above example, ANZ as the agent, is acting on behalf • Lead Bank prepares marketing materials i.e. Information of the syndicate of lenders to simplify dealings with the Memorandum and Management Presentation borrower • Documentation agreed with Lead Bank and Lead Bank negotiates with incoming lenders • More often then not, Lead Bank would be a cornerstone lender Benefits of a Syndicated Loan 5 1 Flexibility in structure and pricing. Borrowers can choose to shape their syndicated loan, including multicurrency options, revolver tranche and prepayment rights 2 Access a larger pool of funds 3 Diversify banking relationships; reduce reliance on few banks Potentially raise funds more cheaply in the syndicated loan market than alternate 4 markets such as bond markets Advantages of Syndicated Loans Bring businesses the best price in aggregate and spare borrower the time and effort 5 of negotiating individually with each bank Provides greater visibility of the debt market to the client helping them establish 6 dialogue with a large number of market participants Transferable – secondary sell down possible, helpful where some of the banks in the 7 bank group face financial distress 8 Underwrite possible for right clients and structures Syndicated Loans – Options 6 ALTERNATIVE 1 - UNDERWRITTEN ALTERNATIVE 2 – BEST EFFORTS ALTERNATIVE 3 – CLUB BASIS • Dealings limited to lead bank group • Certainty of volume and execution • Has “possibility” of lower financing • Certain and reasonable financing costs Merits • Dealings limited to lead bank group costs • Speed – existing relationship, IM not • Diversify banking relationships • Diversify banking relationships required • Slightly Higher financing cost – though these days pricing tends to be similar to club deals • Multiple bank dealings – no lead bank group Challenges • Requirement for flex terms • Uncertainty on volume • Borrower accepts full volume and • Underwriting appetite smaller - execution risk though appetite is returning amongst banks Mandated Lead • Small group of banks (usually 1-3 • ANZ and other relationship banks • Not Applicable Arrangers banks) identified by the Company • The Mandated Lead Arrangers and • The Mandated Lead Arrangers and Lenders banks to be invited by the banks to be invited by the Mandated • Banks to be invited by the Company Mandated Lead Arrangers Lead Arrangers Market Update – Overall Syndicated Loan Market Loan Volume In Asia-Pacific Market Recorded Historical Highs, Driven By Growth In Northeast Asia 8 SYNDICATED LENDING IN ASIA PACIFIC (EX-JAPAN) HONG KONG DRIVES ASIA PACIFIC EX-JAPAN LOAN DECLINED IN 1Q2014 AFTER 4 QUARTERS OF ROBUST VOLUME IN 1QTD 2014, ACCOUNTING FOR 23% OF THE ACTIVITIES, PRIMARILY DRIVEN BY A MORE QUIET QUARTER VOLUME IN CHINA ONSHORE AND SINGAPORE 60% 30% Volume (USD B) Number of Deals by Volume by # of Deals 160 400 50% 25% 140 350 40% 20% 120 300 ) s 30% 15% 100 250 80 200 20% 10% Volume (USD B) (USD Volume 60 150 10% 5% Volume (USD B (USD Volume 40 100 deal of Number 0% 0% 20 50 India China South Korea New 0 0 Ta iwa n Zealand Vietnam Pakistan Malaysia Australia Indonesia 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 Singapore Philippines Hong Kong THERE HAS BEEN A CLEAR TREND OF INCREASE IN M&A FINANCING VOLUME AS A PERCENTAGE OF TOTAL TENOR, ESPECIALLY FOR NAMES WITH HIGH CREDIT LOAN VOLUME REACHED A RECORD HIGH IN 2013 QUALITY Refinancing M&A Others 500 2013 400 2012 51% 300 2011 46% 48% 41% 2010 200 10% Volume (USD B's) (USD Volume 9% 9% 9% 46% 2009 100 6% 45% 39% 50% 43% 48% 2008 0 2009 2010 2011 2012 2013 45 47 49 51 53 55 57 59 61 63 65 Average Tenor in Months Data source: Bloomberg, Dealogic, Thomson Reuters LPC LoanConnector Strong Liquidity Chasing Deals in Singapore Has Resulted in Sharp Drop in Pricing 9 STRONG SGD LIQUIDITY EVIDENCED BY THE SINGAPORE 2013 LOAN VOLUMES PICKED UP DESPITE THE SLOW RELATIVELY LOW LOAN TO DEPOSIT RATIO START TO THE YEAR Source: MAS SINGAPORE IS A KEY PLAYER IN THE Source: Loanconnector SYNDICATED LOAN MARKET SINGAPORE LOAN MARKET IS GENERALLY SGD DENOMINATED •Singapore (9%) US$33.5B Source: Loanconnector Source: Loanconnector Growth in Chinese Loans Driven by M&A and Offshore Financing 10 GROWTH OF OFFSHORE FINANCING BY LOWERED PRICING SEEN OVER 2013 PIPELINE IS BUOYED BY EXPECTED CHINESE BORROWERS FINANCINGS FROM CHINESE BORROWERS 60 100 600 Private enterprises Red-chip SOE 140 90 50 80 500 120 70 40 100 400 60 80 30 50 300 40 60 20 30 200 40 Volume (USD B) 20 of Deals No. 10 Avg. All-in(bps) 20 Volume (USD B) (USD Volume 10 100 0 0 0 2009 2010 2011 2012 2013 0 2009 2010 2011 2012 2013 Jul-11 Jul-12 Jul-13 SOEs Red Chips Private Enterprises No. of Deals Jan-12 Jan-13 Jan-14 Mar-12 Mar-13 Mar-14 Sep-11 Sep-12 Sep-13 Nov-11 Nov-12 Nov-13 May-11 May-12 May-13 RECENT CHINESE DEALS IN THE MARKET DATE BORROWER/GUARNTOR AMOUNT TENOR ALL-IN PRICING PURPOSE May 2014 China Hongqiao Group Ltd USD700M 3 410bps Refinancing April 2014 ICBCIL Finance Co Ltd USD300M 3 225bps General Corporate March 2014 China Resources Power Holdings Co Ltd HKD7,800M 5 175bps Refinancing March 2014 Citic Resources Holdings Ltd USD360M 3 290bps Refinancing March 2014 CNOOC Ltd. USD2,000M 1 80bps Takeout Financing Jan 2014 China Gas Holdings Ltd. USD300M 5 235bps Refinancing Dec 2013 Lenovo Group Ltd. USD1,200M 5 165bps General Corporate Dec 2013 Sinopec Group USD3,500M 5 141bps Working Capital Nov 2013 Haier Electronics Group Co. Ltd. USD150M 3 140bps General Corporate Nov 2013 Beijing Enterprise Holdings Ltd. HKD6,000M 5 205bps Acquisition Aug 2013 China Resources Land HKD7,750M 5 207bps General Corporate Jul 2013 Alibaba Group USD8,000M 3/5 314bps Refinancing ANZ led deal Record Loan Volumes in Indonesia Driven by Demand from the Mining and Natural Resources Sector 11 HEALTHY LOAN VOLUMES IN 1Q14 WITH LOAN DRIVEN BY THE NATURAL RESOURCES / NEW MONEY CONTINUES TO BE AVAILABLE VOLUME OVER USD3.5B MINING INDUSTRIES FOR INDONESIAN CREDITS Source: Thomson Reuters Loan Connector. SELECT INDONESIAN SYNDICATED LOAN TRANSACTIONS Borrower Date Size (USDM) Tenor (yrs) All-in Pricing (bps pa) PGN Pre-Mandate 1,500 5 (avg .life 3.5 yrs) High 100s (Rumoured) Indonesia Exim In Market 600 1/3 125/165 Pelindo II In Market 1,000 5 Mid 200s (Rumoured) CT Corp Mar 2014 1,275 3/5 Low 400s PT Pertamina Feb 2014 1,137 5 (avg. life 3.5) 170 Delta Dunia Textile Dec 2013 150 3/5 (avg. life 3/2.739) 641.67/647.73 PT Adira Dinamika Multi Finance Nov 2013 100 3 (avg. life 1.86yrs ) 198.72 PT MNC Sky Vision Tbk Nov 2013 200 3 490 PT Charoen Pokphand Indonesia Oct 2013 400 3/5 206.7(USD)/226.7(IDR) PT Royal Industries Indonesia Sep 2013 300 3/5 483/508 PT Solusi Tunas Pratama Jun 2013 300 5 400 PT BFI Finance Indonesia Tbk Jun 2013 80 3 311.35 PT Adaro Indonesia May 2013 380 7 (avg.
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