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Economy

Asia M&A drives 9% growth in global syndicated loans

Japan's MUFG, Mizuho and SMFG climbed underwriter ranking in 2018

MUFG organized syndicated loans totaling roughly $200 billion as a lead under writer, up roughly 30% from a year earlier.   © Reuters

TOKYO -- The amount of syndicated loans extended worldwide in 2018 grew 9% on the year, driven by brisk funding demand for mergers and acquisitions in Asia and the U.S.

The total value of such lending, usually organized by top financial institutions, reached nearly $4.59 trillion, the highest level in the past 10 years, data from research firm Refinitiv showed. 

As lead underwriters, Japan's Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group claimed a combined share of just over 10% of the market, up about 1 percentage point on the year.

While major American lenders like JPMorgan Chase held onto the top four ranks in underwriting, MUFG and Mizuho followed in fifth and sixth, respectively, while SMFG climbed to No. 12. The amount of loans raised by MUFG as a lead underwriter rose about 30% on the year to nearly $200 billion as it aggressively expanded business in Asia. It organized funding for a major acquisition by an Indian agrochemical company.

In syndicated loans, the lead underwriter sets the credit limit based on demand, while participating financial institutions purchase the debt. The amount raised by lead underwriters thus reflects funding demand among corporations.

Lead underwriters need to assess borrowers' ability to pay back the loans, in addition to marketing the debt to other lenders. They receive commissions in return.

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