US, Asia Pacific Syndicated Lending Plunge in First Quarter of 2019

US syndicated lending dropped to its lowest quarterly level since the first quarter in three years. As many borrowers postponed their activities following the volatility in the market in the fourth quarter last year and growing economic concerns.

The loans worth $399 billion arranged in the first quarter this year lower by 36% from the $622 billion in the same first three months last year. The figure was the smallest since the $356.5 billion syndicated loans made in the first quarter of 2016, said LPC, a unit of the financial markets data provider Refinitiv.

Bankers are expecting a consistent pace of loan demand for leveraged buyouts, mergers, and refinancing in the near term, as equities and loan prices recover after a wave of sell-offs at the latter part of 2018.

Syndicated lending in the Asia Pacific, excluding Japan, also sank to its lowest quarterly level in seven years, amounting to $76 billion issued in the first quarter of 2019 as tensions in the geopolitical arena continued to impact borrowings in the region.

Lending fell by 39% in the first three months this year compared with $125.11 billion raised in the same period in 2018 and the $124.5 billion registered in the fourth quarter of last year, despite a rise in mergers and acquisitions lending in Hong Kong and Australia that saw various large-scale take-private buyouts at a time when Asia’s leveraged loan market remains growing.

The number of deals completed dropped to 189 in the first three months this year, 46% lower than the 352 loans fulfilled a year earlier. This plunge took place because of the sluggish activity in most Asian countries.

China’s economic slowdown halted the growth of the syndicated lending market because of its trade war with the U.S. that started in the middle part of 2018 continued to cause uncertainty in the region’s markets.

National Bureau of Statistics of China announced that total industrial profits declined by 14% in the first two months this year compared with the same period a year ago because of the early Lunar New Year holidays in February disrupted the country’s industrial and lending activities.