The Loan-Bond Tag Team
Syndicated lending has lost ground as a stand-alone business and is now part of a suite of international and local debt products offered by banks.
Syndicated lending has always been a clubby sort of
business, spared the scrutiny of the public bond and equity
markets. Bankers and borrowers hashed out loan terms and
chipped away at basis points over tennis or a round of golf.
But billions of dollars of losses in Latin America, an
intensifying focus on risk management and the rise of
competitive financing in local markets are redefining the once
comfortable world of syndicated lending. Quantitative models,
not relationships, drive credit decisions and banks have
incorporated lending into a wider suite of international and
local debt products.
Last year, syndicated lending to Latin American companies
fell by nearly half to $22.07 billion from $40.6 billion in
2001, and the remaining active lenders have become much more
selective. Today, banks only want to lend to companies with
revenues in hard currency. "Right now, the driver is who the
borrower is," says Arturo Girona,...
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