Loans in Europe, Middle East and Africa rose to a maximum of three months

Loans to finance acquisitions in Europe, Middle East and Africa rose to a maximum of three months as banks try to take advantage of an increase in procurement.

Emirates Telecommunications Corp., telephone company of UAE-based known as Etisalat, are leading companies in the region the organization of 19 billion U.S. dollars in loans this month to finance acquisitions. The amount is the highest since September, when BHP Billiton Ltd. gained $ 45 billion of loans for his failed attempt to Saskatchewan, Canada-based Potash Corp.

Mergers and acquisitions in Europe, Africa and Middle East increased by 34 percent to $ 890 million this year from the year 2009 as companies that the money accumulated during the recession looking to expand. The banks have lent € 94500000000 ($ 124 million) in 2010 to fund acquisitions in the region, compared to € 51,200,000,000 of last year, according to Société Générale SA.

"The volume of loans in the future will be driven by new money and M large acquisitions," said Damien Lamoril, co-head of European loan syndication in Paris at Societe Generale, the second largest bank in France. "The loan BHP was a turning point and a testament to the confidence of the market. The market has shown it is prepared to support and fund the appropriate operations."

Excluding the financial services sector, the largest 1,000 European companies by market value have accumulated about $ 1.2 billion in cash and equivalents on the basis of its latest regulatory filings.

Loan Market

"Companies are turning to their cash for acquisitions this year, but for the next big acquisition needed to enter the bank loan market," said Tom Muoio, a managing director in the capital of Credit Suisse Group AG equipment loan markets in London.

Fees charged by acquiring loans may be up to twice those obtained by a refinancing of similar size, he said. Refinancing accounted for three quarters of the loan agreements in the region this year.

Elsewhere in credit markets, the extra yield investors demand to own corporate bonds around the world rather than similar-maturity government debt remained unchanged at 170 basis points, or 1.7 percentage points, according to the Bank of America Merrill Lynch Global Broad Market Corporate Index. The average yield of 3.94 percent.

The cost of protecting U.S. corporate bonds default fell for a second day and the prices of leveraged loans rose to its highest in almost six weeks. debt of speculative-grade company is likely to outperform investment grade bonds next year, according to Janney Montgomery Scott LLC.

Bondholder Protection

The Markit CDX North America Investment Grade Index, which investors use to cover losses on corporate debt or to speculate on creditworthiness, the decline of 0.8 basis points at an average price of 84.8 basis points from 16 : 51 in New York, according to index administrator Markit Group Ltd. in London, the Markit iTraxx Europe index of 125 investment grade companies fell 1.3 basis points to 105.58.

The rates tend to fall as improving investor confidence and rising as it deteriorates. The credit-default swaps pay the buyer face value if a borrower defaults on its obligations, less the value of the defaulted debt. A basis point equals $ 1,000 annually on a contract protecting $ 10 million of debt.

Swaps Computer Science "

Credit swaps Computer Sciences Corp. rose to its highest in almost three weeks as executive director Mike Laphen said the Falls Church, Virginia-based company plans to remain independent.

The contract gained 9.4 basis points to 138.5, the highest since December 2, according to data provider CMA. Joseph Vafi, an analyst at Jeffries & Co. said in a September report that a private equity firm could pay $ 8,700,000,000 for the computer services provider and a yield of more than 25 percent in five years.

junk bonds, rated below Baa3 by Moody's Investors Service and lower than BBB-by Standard & Poor's, is likely to exceed debt high in 2011 as a joint venture to strengthen their balance sheets and emitters-solvents repurchases and participate in mergers and acquisitions, Janney Montgomery Scott, said.

"Investment grade issuers are looking to re-take, while high-yield issuers are looking to reduce leverage," said Guy LeBas, chief fixed income strategist and economist at Janney Montgomery Scott in Philadelphia. "The flow of dollars seem to be getting out of investment grade and leading to high performance, and really be kept in 2011."

The S & P / LSTA U.S. Leveraged Loan 100 Index rose 0.8 percent to 92.58 U.S. cents, the highest since Nov. 10. The index tracking the 100 largest dollar loans first lien leveraged.

More Negotiated

Bonds of Charlotte, North Carolina-based Bank of America Corp. were the most actively traded U.S. corporate securities by dealers, with 101 transactions of $ 1 million or more, according to Trace, the bond information system in the prices of the Financial Industry Regulatory Authority.

The Barclays Capital Global Aggregate Bond Index lost 0.44 percent this month, cutting profit this year to 3.72 percent.

The extra yield investors demand to own emerging-market bonds instead of government debt declined 1 basis point to 247 basis points, according to JPMorgan Chase & Co. index data.

Etisalat Loan

Etisalat is in talks with banks to raise $ 12 million in loans to finance its bid for a stake in Mobile Telecommunications Co., or Zain, the largest mobile operator in Kuwait, three people familiar with the matter said on December 13.

BHP does not include loans, which was canceled after the supply of potassium was blocked by the Canadian government, which would be the largest acquisition in loans since August 2008. Spain's largest gas supplier, Gas Natural SDG SA, won € 18300000000 loan at that time to buy Madrid-based power producer Union Fenosa SA.

VimpelCom Ltd., the second-largest Russian mobile network operator, this month hired six banks for a bridge loan of $ 4 billion to finance a merger with Orascom Telecom Holding SAE and Weather Investments SpA.

Barclays Capital, BNP Paribas, Citigroup Inc., HSBC Holdings Plc, ING Groep NV and Royal Bank of Scotland Plc agreed to provide funding for short-term bonds to be refinanced next year. VimpelCom 20 December, said it would seek a new agreement after its biggest shareholder Telenor ASA rejected an initial proposal for $ 6,500,000,000 for the merger.

UPM-Kymmene Oyj, the second largest paper manufacturer in Europe, said Dec. 21 it will finance the acquisition of rivals Myllykoski Oyj and Rhein Papier GmbH EUR 800 million loan for four years, six and seven.

"Bridge to Bonds

Assa Abloy AB, the world's largest manufacturer of locks, said Dec. 13 it received 14 million kronor ($ 2 billion) of short-term loans to finance the acquisition of a majority stake in Cardo AB and other agreements to be refinanced next year, mainly through capital markets.

About two thirds of loans for mergers is likely to be refinanced bonds next year, compared with about one third by 2007 one, according to Credit Suisse Muoio.

"We still see a fairly large proportion of loans for mergers and acquisitions to bridge bonds," Muoio said. "It makes sense that financial firms' debt longer term."