Emerging nations -- Brazil, Russia, India and China -- have witnessed a 20 per cent decline in loans taken by companies in the year 2008, largely due to the fall in volumes in the last quarter of the year under review, a latest report says.
"BRIC combined syndicated loan volume hit $144.2 billion in full year of 2008, down 20 per cent from $180.2 billion recorded in 2007," a latest report by global deal tracking firm Dealogic said.
Syndicated loans are large financing facilities granted to a borrower by a group of financial institutions who share the lending risk between them.
They combine the commercial financing relationship between a bank and its client with the features of market traded debt.
The fall in syndicated loan volume is largely because of less number of transaction in the fourth quarter of the year 2008.
Syndicated loan volume reached $23.1 billion through 50 deals in the fourth quarter of 2008, the lowest quarterly volume since the first quarter of 2006 when $13.2 billion was raised.
The fourth quarter of 2008 also represent the lowest deal count since the first quarter of 2004 when 38 deals were announced.
"This represents a drop in volume of 13 per cent on the fourth quarter of 2007," the report added.
Notwithstanding the fall in syndicated loan volume, BRIC countries have increased their share in the global syndicated loan volume.
"BRIC countries accounted for 5 per cent of global volume in 2008, up from 4 per cent in 2007 and 3 per cent in 2006," Dealogic said. Among the BRIC nations, China was the only country which accounted for an increase of as much as 10 per cent in syndicated loan volume.
"China recorded an increase in volume in 2008, up 10 per cent to $32.5 billion; whereas volumes in Brazil, Russia and India have fallen to $13.7 billion, $64.4 billion and $33.6 billion, a drop of 48 per cent, 27 per cent and 8 per cent, respectively," the report added.
An industry wise analysis shows that the metal and steel sector led BRIC industry rankings in 2008 with $25.3 billion, up 78 per cent compared with 2007.
About eight loans signed in this sector over $1.0 billion in value as compared with only three in 2007, the largest being United Co Rusal's $4.5 billion facility to support the acquisition of over 25 per cent share in Norlisk Nickel OAO.
SBI Capital Markets topped the book-runner rankings in 2008 with a market share of 10.8 per cent, followed by Bank of China with a share of 6.8 per cent.
