Loan Pricing Corp. and Thomson Financial Securities Data, the top two collectors of syndicated lending data, release rankings at the end of every quarter, and each time its the same story: The numbers dont jibe.
The discrepancies sometimes so great that some rankings are reversed tempt bankers to pick the charts that would most impress potential clients. So when bankers are asked which data they prefer, the answer is no surprise: They like the numbers that make them look the best.
In theory, at yearend both charts should be equal, but banks use the tables to sell themselves throughout the year. During the first quarter the top five banks held the same rank on both tables, but the numbers used to calculate those rankings were wildly different.
A recent loan for Triad Hospitals Inc. is a case in point. The company received a $1.6 billion loan that was syndicated during the first quarter. Merrill Lynch & Co. and Bank of America Corp. were the joint book runners on the syndication, and J.P. Morgan Chase & Co. and Citigroup Inc.s Salomon Smith Barney were the documentation agents, according to Thomson Financial Securities Data. (Thomson Financial, a unit of Thomson Corp., also publishes American Banker.)
Loan Pricing Corp. counted the deal in its first-quarter loan syndication rankings, but Thomson Financial did not. That is because while the loan was fully syndicated, the deal did not technically close by the end of the quarter. Thomson has since added the tally to its second-quarter league table data, said Michelle McGuire, a research analyst at Thomson.
Most bankers deny that they use the tables as a measure of success, but the competition is undeniably fierce. The bankers play games by holding back deals so other banks wont know how many deals theyve done during the quarter, Ms. McGuire said.
The data companies use different criteria to tabulate the league tables, and there is no clear consensus on their accuracy. Rather, bankers say the companies measure different things.
Loan Pricing Corp. says it tries to measure activity in the market and counts deals that have been syndicated through the co-agent level but that have not necessarily closed. Thompson Financial, meanwhile, says it counts deals at the lead arranger level, but it only counts deals that have officially closed during a given quarter.
Meredith Coffey, a senior vice president at Loan Pricing Corp., describes its data as representative of when the activity takes place. And the company makes a concerted effort to get a good picture of the market, she said. Its a matter of really going after the banks, and if banks do not respond, we e-mail them, call them. Loans are our business; we have to really go after them.
Thomson says it waits until the primary syndication the fees and the pricing structure is completed and the credit agreement is signed, because that is the date on which the funds would officially be available for the borrower to draw down.
We wanted to capture the amount of volume actually currently out there, Ms. McGuire said.
Big banks usually tend to rely more heavily on Thomson data, while smaller banks gravitate toward Loan Pricing Corp. data, as it is more inclusive of those banks involved at the co-agent level, one banker said.
But the explanation for the discrepancies can get quite creative. For example, Thomson Financial recorded Bank One as having completed only 15 deals for the first quarter, while Loan Pricing Corp. recorded 36 deal completions. According to Ms. McGuire, the person at Bank One who submits the loan information to the data company had left the bank sometime during the quarter.
When Bank One finally got around to submitting its data sometime around the end of the quarter, Thompson did not include it. The data company says its T+10 policy, which mandates including only deals that are submitted within 10 business days of closing, meant that some of Bank Ones first-quarter deals were considered ineligible for that quarters league table data.
Thomson Financial has since added the information, as it normally does, on the 12th day of the month after the quarter ends, she said.
Some banks have taken to using the T+10 rule in their favor, as it is now possible for banks to track the deal flow and activity of their competitors throughout the quarter, Ms. McGuire said.
One syndicated lending banker said: It used to be horrific, where at quarter end, people would inundate both companies with information, leaving little time for the analysts to check the validity of the deals submitted.
Ms. Coffey said Loan Pricing Corp. turns to the market every year for comment and feedback on the league table criteria. After tweaking the rules, the company sets policy for the upcoming year, she said. There will always be things people dont like about that.