Excluding Japan, the scale of US dollar loans in the Asia-Pacific region is expected to decline for the third consecutive year, due to the anticipated absence of large transactions in the coming months, which contradicts previous growth expectations. According to data compiled by institutions since 1999, borrowers have raised over $111 billion in US dollar loans so far this year, excluding bilateral loans, a 16% decrease compared to the same period in 2023. If this trend continues for the rest of the year, it will mark the first time the region has experienced a three-year consecutive decline in sales volume.
Even the two largest loans in the Asia-Pacific region this year—ByteDance Inc. and Alipay Hong Kong Limited, with a combined fundraising of nearly $17 billion—failed to boost the numbers.
Birendra Baid, the head of Asian syndicated loans at Deutsche Bank, stated, "Our transaction volume at the end of this year may decrease by 15%-20% compared to 2023." He indicated that the syndicated loan volume surged in the third quarter of 2024 due to two large transactions from China, which may not be repeated in the final quarter.
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The decline in transaction flow highlights that companies in the region are not raising US dollar loans due to higher borrowing costs in US dollars compared to local markets, as well as the availability of other financing options such as bonds and private credit. This shatters the prediction of a rebound in borrowing volumes this year following the decline in 2023. According to the compiled data, given that borrowing exceeded $43 billion in the same period last year, the scale in the last three months of this year may decrease, which is one of the best-performing quarters in the past two years.
Nevertheless, bankers anticipate a rebound in transaction volumes next year as the Asian region continues to grow at a faster pace than the rest of the world, and companies seek financing for expansion. Loan negotiations may take several months to translate into transactions as borrowers await further rate cuts from the Federal Reserve, which has already begun its easing cycle.
Andrew Ashman, head of Asia-Pacific loan syndication at Barclays Bank, said, "Borrowers have indicated that the gap between offshore and onshore financing costs is narrowing. This situation will only continue if the US dollar rate cuts proceed as planned."