NEW YORK (LPC) - A record $1.45 trillion of US syndicated lending to companies for acquisitions, leveraged buyouts, dividends and refinancing in the first half of the year has propelled bank fees from arranging the loans to all-time highs.
The $8.1 billion earned in the first half of this year slightly topped the prior record $8 billion taken in during the second half of last year, setting a new peak, according to Freeman Consulting Services.
The lending pace escalated in the second quarter and is seen staying heated through year-end, encouraged by lower US corporate tax rates and a federal judge’s June endorsement of the long-pursued mega-merger between AT&T and Time Warner.
Bankers eagerly awaited the outcome of the AT&T/Time Warner ruling, long after the deal was first announced in October 2016, and now expect the decision to keep the chute wide open for similar mergers and acquisitions (M&A) in coming months.
For lower-rated borrowers, there is less onerous enforcement under this administration of leveraged lending guidelines put in place five years ago to rein in high-risk practices.
“The market was firing on all cylinders in the second quarter,” said Jeff Nassof, a director at Freeman Consulting. “There were plenty of new-money loans from both corporate M&A and leveraged buyouts, and it looks like more to come given the relaxed regulatory environment and strong stock market.”
At the current pace, fees will reach an annual record for banks lending to blue-chip as well as to highly indebted companies, according to Freeman, which estimates fees based on Thomson Reuters data.
Fees
