Syndicated loans: think big

Five years ago, syndicated deals in Brazil raised on average $30-80 million. Deals that year totalled just over $12 billion. International banks were almost completely absent from the market and the few participants that had stayed in were hyper-cautious: they would only arrange syndications on a best-efforts basis when the deal was backed, typically with exports. Almost all such transactions ended up as club deals of just two or three banks. The CVRD deal saw thirty seven banks from the US, Canada, Brazil, the UK, Continental Europe, Asia and Australia vying to lend money. The commodities company had the luxury of turning down close to $20 billion in a deal that, partly funded at Libor plus 40 basis points, worked out cheaper than tapping bond markets. The year saw some $36 billion in deals completed.

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