DBS Chongqing

DBS arranges largest Chongqing loan by foreign bank

Deal comes as China’s lenders are passing on some opportunities under pressure from the government to reform, which is opening up chances for foreign competitors, say bankers.

Chongqing Grain Group, the largest Chinese state-owned grain producer in Southwest China, signed its first syndicated loan on Wednesday, and chose to borrow from a foreign bank.

The three-year of $187.5 million loan facility was arranged by DBS Bank and is the largest syndicated loan arranged by a foreign bank in the city of Chongqing.

For decades, China’s largest state-owned banks have funneled people’s savings at cheap interest rates into state-owned enterprises, a process that spurred industrial overcapacity and suppressed consumer consumption.

Since taking office in March, China’s new leaders have said repeatedly they will unleash market forces to rein in excessive lending and improve the banking system’s performance.

China’s lenders are taking note and passing on some potential loans, say bankers, which is creating avenues for foreign financial institutions to step in and support fast-growing Chinese companies in need of cash.

Also, tighter credit conditions on the mainland mean that China's second-tier banks are not lending as much, again leading to opportunities for foreigners. 

“The facility has also better positioned Chongqing Grain Group to attain its strategic goal of developing into a modern, world-class grain conglomerate,” said Hu Jun Lie, Chongqing Grain Group’s president.

Chongqing Grain Group is a major cooking oil supplier to Chongqing and its neighboring cities, producing 10 million tons of oil annually.

DBS was the mandated lead arranger, bookrunner and facility agent while First Commercial Bank and Rabobank joined the transaction as lead arrangers.

DBS China opened its first branch in Western China in Chongqing in 2012.


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