LPC-EMEA loans hit 12-year low as lenders brace for Brexit uncertainty
By Alasdair Reilly and Hannah Brenton
LONDON, June 30 (Reuters) - The Europe, Middle East and Africa (EMEA) loan market is braced for a tough second half of the year after Britain's vote to leave the European Union sent shock waves through the region.
First half issuance hit a 12-year low of US$368bn, according to Thomson Reuters LPC data, as volatile markets kept borrowers away. Bankers fear uncertainty following the referendum decision could hit loan volumes further in the remainder of the year.
"It's impossible to predict what's going to happen, but I expect it to be a lot quieter than expected or hoped for," one senior banker said.
"However, there is no panic. The loan market will continue to do what it has always done -- adapting to changing circumstances and continuing to support clients. That is very much the mantra of the market," the banker said.
Loan volume was down 31% compared to the first six months of 2015 as refinancing -- the traditional driver of EMEA lending -- plunged 56% to US$147bn. Most European companies had already refinanced in the last couple of years at attractively low rates.
Meanwhile, M&A financing was down 31% in the first half to US$74bn as acquisition activity remained sporadic, although a flurry of potential financings from Germany -- including a 60 billion euro bridge loan backing Bayer's bid for Monsanto -- could boost second half figures.
Another senior banker said it would be a "bumpy rollercoaster" for the next couple of months which would act as a restraint on M&A activity.
"The knock on effect is the market is going to very uncertain for some time," he said. Continuación...