Debt Market Update Q3 2017 | KPMG | BH

Debt Market Update Q3 2017

Debt Market Update Q3 2017

The loan volume in the first three calendar quarters of 2017 increased by 21.3 percent to US$52.7bn compared with US$43.5bn recorded in the corresponding period in 2016. Q3 2017 lending increased by 17.6 percent to US$16.4bn compared to US$13.9bn in Q3 2016. Bank liquidity remains strong for quality assets and, combined with the increased appetite amongst institutional lenders for infrastructure assets, has resulted in a vast majority of loans being oversubscribed.

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Key themes

  • Australian bank debt market – M&A loans continued to lift the market, with leveraged buyout financings adding to year-to-date volumes.
  • Australian domestic bond market – corporate supply reached record volume levels with several debutant issuers entering the market.
  • USPP – issuance dominated by large scale NSW infrastructure privatisations.
  • Positive outlook for the rest of 2017 with increased appetite from global investors.

Notable transactions

Notable transactions for the quarter include:

  • A$250m unitranche loan to fund the acquisition of Laser Clinics Australia Pty Ltd by private equity firm KKR & Co. This transaction is another of the recent unitranche1 debt structures that has been executed in the private equity sector in Australia. It has a 5.2x EBITDA opening leverage, which is higher than that observed in recent traditional senior leverage financing(s).
  • A$460m senior leveraged loan for the acquisition of Icon Cancer Care by a consortium led by QIC. The loan was heavily oversubscribed which resulted in tightening of 25bps in pricing. Leverage on the deal was 4.75x EBITDA.
  • A$1.6bn multi-tranche loan to support Australia's largest onshore oil producer Beach Energy’s purchase of Lattice Energy from energy retailer Origin Energy Ltd.
  • TPG Telecom Ltd executed an A$2.4bn refinancing – the syndicate package included commitments from some of the new Asian lenders and institutional investors.

Australian syndicated loan volume (US$billion)

Source: Loan Connector (data extracted October 2017) and KPMG Analysis

Australian syndicated loan volume, LTM by sector (US$ billion)

Source: Loan Connector (data extracted October 2017) and KPMG Analysis

Debt Market Quarterly Update

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