Chinese banks have been increasing their offshore lending volume in Asia-Pacific, outside of Japan, since 2014. Based on the pro-rata mandated lead arranger (MLA) role, China’s offshore lending amounted to US$70.5 billion via 300 deals in 2016, or nearly double the 2015 figure of US$36.3 billion, and nearly three times the 2014 volume of US$24 billion in 2014.

Figures released by Thomson Reuters on June 5 show that the bulk of China’s offshore lending has been concentrated in Northeast Asia. In 2016, Chinese banks accounted for US$52.7 billion through 172 transactions on a pro-rata basis at the MLA lender level, representing an increase of 83% from 2015.

Similarly, strong loan market commitments by Chinese banks were noted among Australasia and Southeast Asia financing, which rose 198% to US$9.7 billion and 95% to US$7.3 billion in 2016, respectively, based on MLA pro-rata commitments.

M&A deal flow factored prominently in the uptick in offshore lending by Chinese banks, which at the MLA level financed 27 M&A-related transactions totalling US$20.6 billion in 2016 – or 29% of the total Chinese offshore lending in Asia-Pacific.

Meanwhile, the Asia-Pacific loan market, excluding Japan, closed 388 deals with a volume of US$110.4 billion by the end of May 2017, representing a decline of US$83.2 billion compared with the same period last year. Northeast Asia provided US$61.7 billion towards the total, followed by South and Southeast Asia with US$30.5 billion and Australasia with US$18.3 billion.

Of the total volume, refinancing loans accounted for US$41 billion for a 37.2% market share, while M&A-related transactions contributed only US$5.9 billion, or 5.4%. Other new money loans amounted to US$63.4 billion.

Including Japan, the M&A loan volume in Asia-Pacific amounted to US$16.6 billion at the end of May 2017. The largest M&A financing to date was the 430-billion-yen (US$3.9 billion) loan to back the leveraged buyout by US private equity firm KKR and Company of Nissan Motor Company’s supplier Calsonic Kansei Corporation.

In terms of league table, the Chinese banks dominated the standing among the mandated arrangers during January-May 2017. Bank of China was on top with a volume of over US$15.15 billion, or a market share of 13.73%, followed by Industrial and Commercial Bank of China with US$7.56 billion (6.84%), ANZ US$5.46 billion (4.94%), HSBC US$4.57 billion (4.13%) and China Construction Bank US$4.47 billion (4.05%).