Despite China’s equity markets falling off a cliff, Chinese corporates have waded into the January sales sniffing at European bargains and giving the continent’s banks a whiff of some juicy loan financings.
On Monday ChemChina (China National Chemical Corporation) said it would buy a 12% chunk of Swiss commodity trader Mercuria, just days after it was also said to be about to buy part of Swiss pesticide and seeds maker, Syngenta, for up to $44bn.
In addition, last week ChemChina announced that it had paid €925m for German materials firm, KraussMaffei from Onex, the private equity firm. UniCredit and Natixis scooped mandates to arrange the related loan.
It’s not the first time ChemChina’s acquisitions have given Europe’s bankers something to do. Last year 13 banks lapped up the €6.8bn loan for its acquisition of Italy’s Pirelli.
The Pirelli bridge loan had a mouth watering initial margin of 275bp and if it's taken out in the bond market, that means another taste for the banks involved.
China’s biggest food company COFCO has had its paws in the honey jar. In 2014 the state-owned firm paid $2bn for a controlling stake in Dutch trader Nidera and is now thought to be planning to lick the dish clean.
Europe’s loans bankers should be grateful for the deal flow after European syndicated loan volume fell 7% year-on-year in 2015, down to $1.15tr.
Global syndicated loan revenue was down 22% from the year before to $13.6bn — the lowest annual total since 2010.
In a European loan market where margins for investment grade corporate financing are as appetising as a New Year's diet, the prospect of high margin, high volume financings to feed Chinese acquisitions could not be more welcome.