Loan House, Australia/New Zealand Loan House

IFR Asia Awards 2012
8 min read
Prakash Chakravarti, Sharon Klyne

With the eurozone woes casting a long shadow over the global lending markets, one bank stood out for its unflinching support of its clients and impressive track record in distributing risk. For matching a healthy risk appetite with a flawless market read, ANZ is IFR Asia’s Loan House of the Year and Australia/New Zealand Loan House of the Year.

Loan House, Australia/New Zealand Loan House

ANZ has made no secret of its ambitions to expand beyond its home Australian market, and it stuck to that strategy in a year when many global rivals were rethinking their approach to Asia.

The bank used its licence to lend to full effect during the review period, supporting existing and new clients and underwriting where appropriate. It booked business in the key Asian markets, featured on high-profile acquisition financings, and extended its dominance in Australia. Most impressive, however, was its determination to do so without compromising its standards, and its ability to avoid mispriced transactions was testament to the bank’s read of the Asian marketplace.

The start of IFR’s 12-month review period in November 2011 came with a cloud of uncertainty hanging over the funding markets. Underwriting was a dirty word, with liquidity and the future of some of Europe’s biggest lenders still very much in question.

Amid such circumstances, the US$3bn financing for Chinese e-commerce giant Alibaba Group, a debut borrower, stood out as a challenging transaction with multiple moving parts.

New relationships

The role ANZ played, as one of the six original underwriters, in structuring and distributing the deal helped Alibaba expand its banking relationships, and set in motion another US$1bn four-year loan for the same borrower a month later. While others dropped out, ANZ again took a leading role on the second Alibaba loan.

ANZ performed strongly in countries outside of its home market of Australasia. In particular, it shone in North Asia, where it rose to the occasion and led from the front, milking its existing relationships or establishing new ones.

Legend Holdings was another new client relationship for ANZ. The Australian lender was one of three original bookrunners on a US$300m three-year dual-currency loan – for which Right Lane was the borrower and Legend the guarantor – that was increased from US$200m. Of the 22 other banks joining, 17 were Taiwanese.

Cross-border M&A and event-driven financings for North Asian companies were the highlight of ANZ’s deal book. ANZ figured as sole bookrunner on Hong Kong-listed cigarette packaging company Brilliant Circle Holdings International’s HK$500m loan for its merger with CT Holdings (International) in August and a US$500m loan bridge backing the acquisition of a bigger stake in New Zealand’s Fisher & Paykel Appliances by Chinese appliance-maker Haier in November 2012.

ANZ also led a consent exercise that waived a change-of-control clause on some NZ$900m of debt at F&P.

The bank was also the sole physical bookrunner on a unique Taiwanese loan, for contract IT equipment maker Pegatron Corp. The US$900m accounts receivable-factoring facility, signed in November 2012, comprised tranches secured against receivables from Apple and Ireland-incorporated Apple Sales International, and was the first of its kind in Taiwan supported by overseas banks.

The Australia-headquartered bank was also one of three underwriters on a HK$1.4bn three-year loan for Hong Kong-listed Fortune Real Estate Investment Trust, which was the first underwritten borrowing of 2012. Signed in February, the loan drew commitments from nine other lenders.

Another hugely successful loan was a HK$2bn 3.5-year borrowing for AMVIG Holdings, a cigarette packaging-maker in which Australia’s Amcor holds a majority stake. ANZ leveraged its relationship with the parent to win a joint mandate on AMVIG’s loan, which received commitments from 21 other lenders.

“It is a misconception that our bank is only strong in Australasia. We have stepped up for our clients no matter where they come from and, in some cases, have established new relationships. In several transactions, such as AMVIG, we have managed to displace existing and established relationship banks because of our compelling value proposition,” said John Corrin, global head of loan syndications at ANZ.

ANZ notched up an impressive performance in Hong Kong, again underwriting several deals. ANZ was one of eight lenders backing AIA Group in its US$1.73bn bid for the Asian insurance assets of ING. The bank was also one of nine bookrunners on a Skr10.5bn (US$1.51bn) three-year refinancing for Hi3G Enterprise, a Swedish unit of Hutchison Whampoa, in July.

Dominant Down Under

Late in 2011, ANZ predicted that liquidity would remain constrained in 2012. The bank expected pricing to move up as a result, refinancing to drive volumes, underwriting to be available for the right names and shorter tenors to be the sweet spot for investors.

All of these predictions were borne out in the ensuing months, particularly in Australia, where ANZ stood out over other domestic and foreign lenders, remarkably winning a dozen sole mandates, four of which were fully underwritten.

These included an A$500m four-year acquisition loan for building-materials firm Boral to fund the acquisition of Lafarge’s 50% stake in their Asian plasterboard joint venture, an A$390m project financing for junior miner Sandfire Resources, as well as an A$140m refinancing for the Dampier-Bunbury gas pipeline.

However, the master stroke was ANZ’s gutsy move to underwrite fully an A$1.2bn capital expenditure loan for Whitehaven Coal, Australia’s largest independent coal producer, to fund a mine expansion. The deal was cut in November 2012 against a backdrop of softening commodity prices due to faltering demand from China, bearing testimony to the bank’s distribution capabilities.

ANZ has differentiated itself from its domestic competitors with a clear strategy to tap into Asia’s burgeoning economies and growing population. In addition to the financial centres of Hong Kong and Singapore, it has loan syndication desks in Beijing, Taipei, India, London and New York.

“From a distribution angle, we have a better read with people on the ground. Our pitch to clients is that ANZ is the clear distribution leader. You can tap Asian liquidity because of the relationships we have,” said Sean Joseph, head of loan syndications for Australia.

The breadth of its network has paid dividends back home, where the bank dominated with a 30% share of the local loan market during the review period, based on bookrunner credit.

Proof of the bank’s wide suite of debt products was amply demonstrated in an unusual A$1.4bn performance-bond facility for Australian contractor Leighton Holdings in November 2012. ANZ devised a structure to deal with the company’s growing work-in-hand requirements in relation to its projects in Australia and Asia.

ANZ acted as fronting bank to optimise liquidity, operating a single performance bond platform and taking the risk off other banks. The strategy paid off when the deal was increased from A$1.0bn to A$1.4bn after drawing commitments of A$1.5bn.

Big features

Elsewhere in the region, ANZ did not shy away from big-ticket financings, including the commodity sector deals for a host of names in Singapore, such as Cargill, Gunvor, Noble Group, Olam International, Trafigura and Vitol, among others, as well as India’s Reliance Industries and Indonesia’s Tower Bersama, among others.

The bank also demonstrated leadership in opening up new pools of liquidity for Australian borrowers seeking to diversify funding sources. The bank has arranged 25 Asian roadshows for Australian companies over the last 18 months, while it helped bring institutional investors into an A$400m loan backing the acquisition of transport logistics firm International Energy Services.

Among the project financings of note for ANZ was the US$2.875bn 16-year project financing for the development of Origin Energy and ConocoPhillips’ Australia Pacific liquefied natural gas project in Queensland.

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Loan House, Australia/New Zealand Loan House