Thursday, April 02, 2009

Significant Decrease in Asian Syndicated Loans Outside Japan

One of the main reasons behind the coming of global economic recession was that banks gave too much money and they could not recover them and it triggered the crisis. So, now many banks are reluctant to take risks but big companies need big loans and often they have to go for syndicated loans. If you did not know about the definition of a syndicated loan then I would like to tell you that it is a kind of loan that is big in amount and several banks and financial organizations together come and join and from a syndicate and give the loan. Now because of the economic crisis, getting syndicated loans is becoming very difficult in rest of Asia except Japan. But as a result, there has been sharp decline in this field.

Bloomberg reported:

Asian syndicated loans outside Japan slumped 64 percent in the first quarter to the least since 2004 as banks tightened lending.

Loans totaled $19.9 billion in the first three months, compared with $54.6 billion a year earlier, according to the data compiled by Bloomberg. There were 82 transactions, down from 209 a year earlier.

This is bad news for a Asian overall economy because at this moment, the big companies need loans and they are becoming helpless because there is a global crisis and their workers are worried about the future job prospects.