BBVA increases its syndicated loan market share in Spain to 14.8% in 2016
BBVA closed 2016 with an excellent achievement in terms of its loan business. The Bank acted as Bookrunner (the top role of any institution in a syndicated operation) in 60% of the transactions in which it was involved. Also, it increased its market share from 8.2% in 2015 to 14.8% in 2016.
Against a difficult time for the market where there have been less transactions overall, BBVA has been able to increase its market share and is now the second largest bank by turnover in Dealogic's ranking. The Bank acted as Sole Bookrunner in 18 transactions and Joint Bookrunner in six of the highest-volume transactions of the year.
The loan market in 2016
In 2016, the syndicated loan market registered strong liquidity in all sectors. However, the most active sectors by volume were: construction/infrastructures, industry, energy and telecommunications. In addition to the aforementioned sectors, financial institutions provided "new money" to transactions involving companies from all kinds of sectors.
As regards volume, there was a downward trend when compared to 2015 (-48% in Spain) – which was the best year since the start of the financial crisis (specifically, since 2007). Nevertheless, new money played a more important role in 2016 than in 2015 when the market was almost completely dominated by refinancing transactions and their associated decrease in prices. In 2016, even in refinancing, some companies were able to leverage the good liquidity conditions to increase the amounts of their transactions for new investments.
Another major 2016 trend consisted in formalizing banking transactions as a basis for subsequent transactions in capital markets, both equity (IPOs) and fixed income (new high-yield issues). BBVA was a major market player in this type of deals by leading all main transactions, specifically:
Outlook for 2017
2017 should be the year for new money transactions to fund new investments as well as a year marked by the return of M&A after several transition years characterized by the normalization of post-crisis prices (European convergence and deleveraging). Market liquidity should keep boosting the non-investment grade market, both in terms of banking loans and in terms of institutional investors (Term Loan B), as an alternative to the high-yield bond market.
According to BBVA experts, M&A transactions will undoubtedly be one of the main levers of the syndicated loan market in 2017. After a long deleveraging phase and now faced with opportunities in various sectors, the leading Spanish corporates should start a period of inorganic growth, especially outside Spain. In this way, they should be able to benefit from the excellent funding conditions offered by the banking market; and this even applies to corporates that mainly obtain their funding from the long-term bond market.
Additionally, M&A transactions with venture capital funds are expected to keep going up in 2017. They should be funded by Leverage Buy-Out type loans with greater emphasis in underwriting. In this context, we expect a return to underwriting as a guarantee for funds against a backdrop of competitive processes where information confidentiality and quick execution are key aspects.
As for sectors, special mention should be made of the following: the pharmaceutical sector should see a consolidation of the leading world laboratories as well as the specialization of some sectors; the energy and infrastructure sectors will show increasing internationalization and leverage opportunities in developing countries; the telecommunications sector will benefit from opportunities for secondary operators; and the chemical sector will play an important role as reflected by the recent Bayer and Lanxess deals (this sector does not have as much of a determinant influence in the Spanish market though).
As regards project finance in Spain, it is to be expected that the energy sector will register refinancing and acquisitions of renewable projects with a potential IPO to the capital market.