| Loan syndication departments have been working at fever pitch since last year. But they continue to suffer dangerous pressure on margins, while maturities are stretched and covenants become sketchier. The competition is tempting them to take higher risks for less reward. That will continue until a shock kicks on the cycle. In 1995 volumes hit their highest-ever levels $374.2 billion compared with $178.2 billion in 1994, tailing slightly to $180 billion in the first six months of this year. Yet at the beginning of the 1990s the market was bleak, for both borrowers and lenders, before it warmed up. The syndicated loan market tends to follow a cycle. Many larger corporates have taken advantage of the recent ludicrously low pricing to refinance their medium-term debt, and lock it in for five years or more. Refinancings, via revolving facilities, have dominated the scene for the past 18 months. Some lenders are now wondering where profit-making deals will come from after 1995's record refinancing-fuelled boom. The pace hardly slackened this year. Grant Johnson, head of loan syndication at NatWest Markets, comments: "The market remains strong an endless stream of banks still seem ready to participate in the right deals." |