Chinese banks are on track to help arrange more than 20% of syndicated loans in Australia in a slow first quarter, with deal volumes expected to pick up from April.
China Construction Bank Corp is the top arranger of loans so far this year, it was involved in A$1.69bn ($1.29bn) refinancing for China’s State Power Investment Corp’s acquisition loan of Pacific Hydro, according to data compiled by Bloomberg. Chinese appetite for Australian assets is showing no sign of abating, providing a boost to the loan market that is headed for the slowest quarter in seven years. Volume is down about 70% compared with the first quarter of 2016.
At least 16% of $23.8bn of Australian loans still in the works are tied to acquisitions and property projects in Australia by Chinese companies, data compiled by Bloomberg show. The loan pipeline is building and there are a number of deals ongoing, which still have not been reflected, according to John Corrin, global head of syndications at Australia and New Zealand Banking Group Ltd.
“Undoubtedly the market is lower, but there’s been more action than what’s showing,” said Hong Kong-based Corrin in a telephone interview on Monday. Chinese investments in Australia that have a “strong industrial logic” will probably continue, even as Chinese authorities take measures to slow more speculative deals, he said.
CCB and Bank of China Ltd helped arrange A$1.95bn of loan deals in Australia so far this year, according to Bloomberg-compiled data. That compares with A$2.81bn, or 10% of total deals in the first quarter of 2016, by the two banks, together with Industrial & Commercial Bank of China Ltd, Bank of Communications Co Ltd and Agricultural Bank of China Ltd combined, the data show.
Yanzhou Coal Mining Co’s subsidiary, Yancoal Australia Ltd, is sounding out banks for a loan of about $2bn to back its planned purchase of Coal & Allied Industries Ltd. China’s Golden Concord Group Ltd, Xinjiang Goldwind Science & Technology Co, and SPIC were among those that were said to have been invited to submit second round bids for Origin Energy Ltd’s Stockyard Hill wind farm.
Dalian Wanda Group Co has also sounded banks for a construction loan for its No 1 Sydney project after the company got a A$230mn facility to buy sites last year. The conglomerate is also seeking a $550mn loan for a Gold Coast joint venture with Ridong Group.
Australia stands second only to the US as a preferred country for Chinese investors last year, according to data released by American Enterprise Institute.
“Chinese banks are looking to do more business with a wide range of clients” in the Asia-Pacific region including Australia, said ANZ’s Corrin. “Whether they will lead deals in many countries outside of China, I think that will be a more gradual process.”



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