China M&A loans sink to 3-year low


HONG KONG • Chinese acquisition-related loans look set to end 2018 lower for the second year running with prospects of a turnaround looking dim as a trade war crimps appetite for overseas deals.

Event-driven loans made by Chinese firms in foreign currencies are down 41% this year to US$18.2 billion (RM75.89 billion) from 2016’s US$30.7 billion, according to Bloomberg-compiled data.

Those deals include acquisition financing, leveraged and management buyout facilities and secondary buyout loans.

Overseas volumes have slumped amid tighter Chinese government scrutiny and a crackdown on capital outflows.

As the US trade war with China persists and dealmakers meet resistance from foreign regulators, the environment will continue to be challenging, according to Standard Chartered plc (StanChart).

“Chinese buyers are now more likely to sit on the sidelines, awaiting a clearer picture on regulation and trade tensions,” said Lyndon Hsu, global head of leveraged and structured solutions at StanChart in Singapore. “China merger and acquisition (M&A) loan activities will continue to be dampened depending on the trade tension outcomes and continuing external regulatory scrutiny.”

Lukewarm acquisition activities from China helped drag M&A financing in Asia Pacific excluding Japan to a three-year low, sinking for a second consecutive year.