The syndicated loan market has proven to be quite resilient, despite the trade war between the U.S. and China, and the correlation with U.S. interest rates; the effects of Brexit; the impact of emerging markets like Turkey and Latin America; and the instability in Italy in March and April of 2018. In Spain, the syndicated loan business has grown 36%, reaching a volume of €76.55 billion. 2018 was a year with a great deal of activity in the market, with a total of 246 syndicated transactions, compared to 225 transactions in 2017.
2019 is brimming with opportunities in the loan market due to the arrival of new actors and increased volatility. Companies can expect a competitive market due to high levels of bank liquidity and rising M&A activity.
In Spain, the syndicated loan business has grown 36%
An active year for project finance
In the infrastructure sector, 2018 saw a continuation of refinancing designed to improve conditions for borrowers, with very significant deals in which BBVA has been the Mandated Lead Arranger, such as refinancing Tunels, Aumancha and the BAMSA award.
In the energy industry, 2018 was a year in which greenfield projects, or projects that provide financing to build new plants, make a comeback. The Goya Project was the most significant operation in the market. The first operation finalized in Spain without regulated revenue, the Goya Project relied on financing from a Power Purchase Agreement (PPA). Again, BBVA led the operation.
In terms of structured financing in the commercial real estate sector, there was a great deal of activity in 2018 to finance the acquisition of assets and refinance existing debt in order to improve the conditions. Many financing deals were also closed to develop new greenfield projects, or projects whose purpose includes CAPEX repositioning programs, especially in the hotel and retail sub-sectors. Some of the most significant deals include the Socimi hotel chain Atom, the retail building and offices of Gran Vía 1 in Bilbao and the Hotel OD Plaza Isabel II.
Blockchain: a new actor on the scene
Technologies play an essential role in our daily lives, from facilitating the most routine tasks to more complex processes. 2018 was the year they burst into the financial sector, showing their highly disruptive potential and their capability to transform the building blocks of wholesale banking.
BBVA has been a pioneer in this field, which is still maturing in regulatory and technical aspects. The bank formalized the world’s first corporate loan using blockchain technology with Indra. From a qualitative standpoint, this was one of the operations with the greatest impact in Spain and abroad.
2018 was the year they erupted in the financial sector
On a similar note, BBVA announced an agreement with Repsol to develop financial solutions based on blockchain technology last June. Since then, other corporate clients have started to apply this technology thanks to BBVA. ACS formalized a €100 million bilateral loan last July; Red Eléctrica signed the first syndicated loan based on blockchain technology in the world; and finally, Porsche Holding, obtained a €150 million loan using this technology.
The use of blockchain technology in syndicated loans will occur progressively. To do so, greater collaboration is needed between the different entities, and a clearer commitment by some of them in a field that has traditionally been scarcely digitized.
Green loans, full-fledged participants in the market
2018 was a year of consolidation for green loans in their different forms. The green loan market gained traction in terms of volume, the number of new loans and recently became global in nature.
Spain has been one of the biggest markets for green loans, where BBVA maintains its leading position. The bank acted as sustainable agent in multiple operations of reference in the market, including: the largest green syndicated loan in the world, granted to Iberdrola for €5.3 billion; the first green loan to an insurer, MAPFRE, on a global scale; a syndicated revolving credit facility for €800 million to AENA; and financing for the Community of Madrid for €340 million.
Experts say that highly significant operations will start to emerge in new sectors in 2019. In addition, the Green Loan Principles coming into force - as well as their updated version, which expands on the range of sustainable products - should help establish a more coherent and credible standard for this evolving market with robust growth.