LONDON: Lending volume in Europe, the Middle East and Africa (EMEA) in May was near-flat month-on-month at $58.0 billion as euro zone volatility deterred companies from taking new loans, Thomson Reuters LPC (TRLPC) data showed. May's loan volume, which compared with $58.12 billion in April and $44.8 billion the previous year, brings EMEA syndicated lending to $246 billion for the year so far — 21 percent lower than the first five months of 2009. The syndicated loan market remained liquid and open for business in May but was overshadowed by the euro zone crisis which effectively closed the corporate bond and high-yield bond markets. Bank funding costs started to rise in late May, capping any further declines in loan pricing as volatility increased in the wider capital markets. Average high-grade loan pricing dropped to 176 basis points (bps) in May from 180 bps in April and 212 bps in the first quarter, according to TRLPC data. Lending to investment-grade companies dipped 3 percent month-on-month to $41.3 billion in May, whereas lending to more heavily indebted leveraged companies rose by 8 percent to $9.7 billion as a flow of smaller transactions built. Activity in the loan market far exceeded the bond market which saw only $1.4 billion of corporate bonds issued in May, down from $8.7 billion in April, according to Thomson Reuters SDC data, as bond investors spooked by the sovereign debt crisis turned the funding tap off. Meanwhile, high-yield bond volume plummeted 72.8 percent month-on month to $2.1 billion in the same period as rising volatility discouraged issuance, SDC data shows. The outlook remains muted as the end of the second half approaches with just $84.35 billion of loans for non-leveraged companies in the pipeline — 52 percent lower than last May — and $12.1 billion of leveraged loans for more highly indebted companies showing a 59 percent decrease from the previous year.
