The global syndicated loan market faced a significant increase in the first quarter of the year, prompted by strong growth in Europe, according to a report released by Dealogic.

The market grew by 13.2 per cent globally to $496.4bn in the first three months of the year, compared with the same period last year, according to the provided data.

The growth was driven by a 26 per cent increase in European lending to $185.3bn, which more than offset a 1.4 per cent decline in the US market to $208.8bn, according to the preliminary figures provided by Ivar Simensen.

Some bankers say that the growth in Europe testifies to the improved market conditions for borrowers, rather than a marked increase in demand for new funds thanks to corporate activity such as mergers and acquisitions.

“The growth in Europe has been driven by the refinancing of deals, many of which were done only in 2004,” said Peter Ellemann, head of loan origination at ABN Amro in London in an interview with Ivar Simensen. “Banks are simply churning the same money with the same clients at cheaper levels and with a longer tenor.”
The figures also make evident the different interest rates levels in the two regions. Eurozone interest rates have remained unchanged at 2 per cent since June 2003, while US rates have increased to 3.75 per cent from 2 per cent in the past nine months.