Market Monitor

Edited by Peter Lee

Syndicated loans: The perils of going Dutch

At 2pm on a Monday afternoon in mid-October, senior representatives of 10 of the Euroloan market's leading commercial banks gathered at Voorlinden at Wassenaar, near The Hague. They had not come to admire Voorlinden's impressive gardens and stately setting. It was the treasury officials of Dutch telephone company KPN and its loan arranger Goldman Sachs who commanded everyone's attention on the afternoon of October 14.

Several bankers nearly didn't make it, wrong-footed by the last-minute change of venue needed to accommodate all those wanting to attend. Lenders' meetings in this market are normally mundane affairs, but a surprisingly large number of senior bankers decided to see for themselves a presentation that promised to be eventful.

Two weeks earlier, a cry of dismay had risen from the loan market, when first-time borrower KPN made the unusual choice of Goldman Sachs - not recognized as a top arranger of syndicated loans for European corporations - to lead the jumbo Fl2.25 billion takeover financing to support its agreed acquisition of Australia-based TNT.

KPN's decision to award a sole mandate to the US investment bank would by itself have caused commercial bankers' emotions to run high.