Friday, December 26, 2014

" BMO in the mix" Energy companies fuel loans record. Banks arranged $220.4 billion in 462 loans

Energy companies fuel loans record

 Expansion drives borrowing                              626

Canadian syndicated loan issuance climbed to a record this year as pipeline operators and energy firms fuelled loan renewals for expansion and acquisitions.

Banks arranged $220.4 billion in 462 loans for companies including Enbridge Inc. and Suncor Energy Inc. in 2014, up from $219.1 billion in 2013 and the fifth straight year of rising issuance, according to data compiled by Bloomberg.

Almost 80 per cent came from renewing revolving loans, and almost a quarter was lending to oil and gas companies, the data show.

"It is effectively companies building their business platform through acquisitions," Patrick Meneley, head of global corporate and investment banking at Toronto-Dominion Bank's TD Securities unit, said. "A lot of it is Canadian-based companies that are financing in our market and doing things outside of our market. That's really the story of syndicated loans and what drives the high levels of activity."

Canadian banks continue to expand lending even as U.S. syndicated-loan issuance shrinks. Companies borrowed $1.83 trillion this year in the U.S., while issuance for all of 2013 was $2.15 trillion, Bloomberg data show.

RBC Capital Markets extended its top ranking for syndicated loan issuance for a second year, providing $42.2 billion of loans for companies including Talisman Energy Inc. and Barrick Gold Corp. TD climbed to second spot from third in 2013 with $36.3 billion of loans, while Canadian Imperial Bank of Commerce rose to third from fourth with $34.6 billion in loans, Bloomberg data show.
Bank of Nova Scotia and Bank of Montreal's BMO Capital Markets ranked fourth and fifth. Rankings and data may change as more deals are recorded.

"All of these companies have liquidity facilities that are very important to them, and some are quite sizable," said Mark S. Chandler, head of Canadian syndicated and leveraged finance at RBC Capital Markets.

Oil-and-gas firms accounted for about 23 per cent of the borrowings this year, with about $53.4 billion in term loans, revolving credit lines and facilities, data compiled by Bloomberg show.

 Pipeline operators borrowed $20.8 billion, led by Calgary-based Enbridge, with $12.8 billion of revolving loans, and TransCanada Corp., with $3.65 billion of borrowings.

Other large borrowers included Montreal-based engineering firm SNC-Lavalin Group Inc., with $6.72 billion of borrowing, and Brookfield Asset Management Inc., with $4.47 billion, the data show. An investment-grade company in the BBB rating range is paying about 145 to 150 basis points more than bankers'
acceptances for a four-or five-year syndicated loan, little changed from a year ago, Chandler said.

The three-month Canadian dealer offered rate, based on bankers' acceptances, was 1.29 per cent yesterday.

Companies also tapped banks for $15.6 billion of term loans, often used to finance takeovers, up from $12.7 billion in 2013, Bloomberg data show.

"It's really a repeat of 2013 where you have Canadian borrowers taking advantage of an extremely stable bank market," Chandler said in a phone interview. "Basically, when that's happening they just continue to extend or refinance their bank facilities."

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