New Delhi: Companies in Asia-Pacific region are warming up to investment grade borrowings with the average deal size so far in 2008 more than doubling from the year-ago levels, according to data compiled by Dealogic.
The total volume for investment grade loans, defined as those with high credit quality and low risk profile, has reached $128.3 billion since the beginning of this year — the highest ever YTD volume — with SBI Capital Markets emerging as ninth largest book-runner for such deals.
With nine deals worth a total value of about $4.1 billion, SBI Cap is the only Indian entity in the top ten bookrunners for such loans in Asia-Pacific, excluding Japan, the data shows.
Bank of China Ltd is the largest bookrunner with deals worth $9.7 billion to its credit, followed by HSBC, BNP Paribas, Citi, UBS, Goldman Sachs, Barclays Capital, Banco Santander SA, SBI Cap and Westpac in the top ten.
In terms of number of deals, SBI Cap is the fourth largest with nine deals, after BNP Paribas (15), HSBC (12) and Westpac (11).
The Indian investment banking major has been involved in larger number of deals than Bank of China (6) and Citi (4), while UBS, Goldman Sachs, Barclays Capital and Banco Santander SA have just one deal each to their credit so far in 2008.
In terms of percentage share in the total investment grade loan deals year-to-date in 2008, SBI has 3.2% ahead of 2.9% of Westpac, while that of other top-ten bookrunners are between 6.1-7.6%.
According to Dealogic, the average deal size of investment grade loans from Asia-Pacific (ex-Japan) has more than doubled to $570 million YTD this year from $259 million in comparable period of 2007.
Asia-Pacific, excluding Japan, accounts for 17% of global investment grade loan volume so far in 2008, up from 8% a year ago.
The total volume of such loans from the region has reached $128.3 billion through 225 deals this year, marking a 79% increase from $71.7 billion raised through 277 deals in the same period last year.
Investment grade ratings indicate bond offerings with relatively low risk of default. The bonds with below investment grade credit ratings are generally considered to be of lower credit quality and some of them are also known as junk bonds.
The mining sector topped the year-to-date industry rankings in 2008 mainly due to BHP Billiton’s $55 billion via bookrunner BNP, Banco Santander, Barclays, Citi, Goldman Sachs, HSBC and UBS with proceeds to be used to support its Euro 73.7 billion acquisition of Rio Tinto, Dealogic added.