One of the changes at this year's Syndicated Loan Symposium in New York last week was the presence of corporate executives such as Triton PCS Inc.'s Daniel E. Hopkins and Federal Mogul Corp.'s Thomas W. Ryan.
They helped bring some diversity to the conference's usual speaker lineup of bankers, analysts, and fund managers. The executives, most of whom are responsible for their companies' borrowing practices, reminded bankers that lending is a two-way street.
"We want to be good partners," said Paul B. Queally, a general partner with the buyout firm Welsh Carson Anderson & Stowe. "But we also have e-mail. If we have someone in a syndicate who gives us a hard time, my partners know about that in 30 seconds."
Federal Mogul's Mr. Ryan stressed that borrowers should watch who invests in a syndicated loan. He suggested that the best syndicates include banks or investors with a consistent buy-and-hold strategy.
"It sends a strong signal," Mr. Ryan said. "I want someone to support me when things aren't so rosy."
Mr. Ryan also advocated a one-stop-shopping strategy for borrowers. "It's efficient," he said, because banks "don't have to learn everything about us when we decide to do something."
Mr. Ryan's company is a recent customer of Chase Manhattan Corp. Chase has syndicated $2 billion for Federal Mogul, a Detroit-based auto parts maker.
Chase and its customers seemed to dominate the conference, even though it was sponsored by Strategic Research Institute and American Banker. Five Chase bankers spoke at the conference, compared with just one from Bank of America Corp., the No. 2 syndicated lender.
Payson Swaffield, co-manager of Eaton Vance's $7 billion loan portfolio, got bankers' attention when he talked about the quality of loans produced this year."We have not seen this poor a credit record in a long time," he said, citing rising industry default rates and his fund's own 1.6% default rate. "We've seen every major deal sponsor trip up in every way."
And that was the good news compared with Mr. Swaffield's take on what kind of returns those loans are paying: "It's been pretty bad," he said. "It's been the worst year in the history for prime funds."
Mr. Swaffield blamed the poor performance on high volatility - prices for bank loans in the primary and secondary markets have shifted quickly and often. That unpredictability has been coupled with a lack of liquidity, he said. In other words, loans cannot be traded.
Christopher Jansen, a managing partner with Stansfield Capital Partners, was similarly concerned.
"We'd like to see loans bid to their intrinsic value rather than their scare value," he said. But, he added, "we don't see a need to go out and sell distressed credits. We have defaults that are still paying interest."
The conference's chairman, Peter Gleysteen, group head of syndicated finance at Chase, had his own thoughts on the issue: "The problem is no one wants to sell the good stuff."
