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Africa money legalising rhino horn, ivory trade in focus

´╗┐* Rhino horn now worth more than gold* Trade may be worth $234 million a year* Asian demand turbo-charged by economic growthBy Ed StoddardJOHANNESBURG, April 26 Almost two rhinos a day are being poached in South Africa for their horns, which are worth more than their weight in gold. This surge in rhino killings has coincided with a rise in elephant poaching for ivory across the continent and reignited debate about whether or not the trade in the commodities these animals are being killed for should be opened up. The questions raised are not just ethical or ecological but also economic, and we are not talking small change. Take rhino horn, which now has a street value of $65,000 a kg, making it more valuable than gold, platinum or cocaine. Used to treat a range of ailments in China and southeast Asia, its demand has rocketed in tandem with the region's blistering economic growth and appetite for other commodities. Trouble is, the sale of rhino horn is strictly banned under the Convention on International Trade in Endangered Species (CITES), the global treaty that governs trade in plants and animals. Almost 450 rhinos were poached in South Africa last year and at current rates, that number could reach 600 or more in 2012.

African rhinos have a pair of horns and in the case of the white rhino, the biggest and by far the most numerous of the two species on the continent, their average combined weight is usually close to 6 kgs, researchers say. The average weight of both horns on the smaller black rhino is about 2.5 kgs but over 90 percent of the poaching incidents involve white rhinos. So over 600 animals could mean 3,600 kgs of horn worth close to $234 million on the street. Advocates of reopening the trade including game farmers and end users make arguments similar to those who support the legalisation of drugs: they say such a move would remove criminals from the equation, allow the business to be regulated, and enable governments to tax it. In the case of rhino horn, the annual figures could far exceed $234 million annually if the animals were farmed for that purpose with their horns, which grow back after being cut off, harvested on a regular basis.

LIKE CATTLE, JUST BIGGER Sound far-fetched? Well, according to government data, in 2010, 4,531 of South Africa's population of 18,780 white rhinos were in private hands on game farms and ranches. In private collections there may be tens or perhaps hundreds of millions of dollars worth of rhino stockpiles. No one knows the precise figure but it almost certainly significant. Rhinos are a key species in game farming, which according to the Financial Mail, is now South Africa's sixth-biggest agricultural sector, employing more than 100,000 people. The argument goes that privately-owned rhinos could be bred and their horns harvested to meet the burgeoning Asian demand.

Horn harvesting could also be done in national and provincial parks with the proceeds put back into conservation. This part of the argument seems compelling when one considers the limited resources South Africa's government has compared to the country's pressing social needs. Spending money on animals may not go down well in poor black townships that still lack power or reliable water supplies. There are also huge stockpiles of ivory from elephant tusks locked in government vaults. The last CITES-sanctioned auction from such stores in 2008 by South Africa, Namibia, Botswana and Zimbabwe were supposed to generate funds for conservation. The bottom line is that in impoverished Africa, home to the last great numbers of what biologists term mega-fauna - meaning really big animals - wildlife must pay for itself. Opponents of opening up trade in rhino horn and ivory, including some conservationalists and animal welfare organisations, argue that wildlife in Africa is already paying for itself as it is the top draw in countries such as Kenya, east Africa's largest economy, which relies heavily on tourism. Tourism took a record 98 billion shillings ($1.19 billion) there in 2011. One concern is that "dirty" ivory or rhino horn will get laundered with the licit stuff - a point underscored by the involvement of organized crime groups in the illegal trade. The initial ban on the ivory trade in 1989 was credited with stemming a slaughter of African elephants at the time. Changing the rules for rhino horn or ivory is not easy and requires a two-thirds majority vote at CITES' Conference of the Party meetings, held every 2 to 3 years. South Africa has already signaled it will not put in a proposal to sell rhino horn at the next one in Thailand in 2013 but is widely expected to do so at a following meeting. One thing is clear: Asian demand for ivory and rhino horn, like its thirst for coal and oil, is only going to grow. Striking a balance and finding a way to meet it, while protecting African wildlife, may be essential.

Asia pac loans hit three year low despite chinese m&a boom

´╗┐HONG KONG, Dec 30 (LPC) - Syndicated loan volumes in Asia Pacific, excluding Japan, fell for the second consecutive year slipping to a three-year low of US$463.8bn in 2016 as slower economic growth and geopolitical turbulence curtailed bank lending despite a surge in M&A activity from China that boosted North Asian loans. Lending in 2016 of US$463.8bn from 1,291 transactions, was down 1.6% from US$471.26bn in 2015, and is the lowest annual figure since 2013 when US$462bn was raised from 1,289 loans. Fourth-quarter 2016 volume of US$103.14bn was also the lowest fourth-quarter tally since 2012 and 1.85% lower year on year. China, Asia's largest syndicated loan market, (ex-Japan), led the market with a wave of event-driven financings backing China Inc's overseas acquisition spree. It pushed M&A lending in 2016 to US$80.8bn, equalling the previous record set in 2007 and almost 70% higher compared with US$47.86bn raised for the segment in 2015."The loan market in 2016 has been supported by a significant increase in M&A activity, with a broader universe of Chinese corporates in particular being very acquisitive and completing jumbo-sized, cross-border acquisitions as they look to acquire technology and grow outside of their home market," said Amit Lakhwani, head of loan syndicate & distribution, Asia, at Standard Chartered Bank. Asian lending and M&A deals in particular, received a huge fillip with a US$12.7bn bridge loan for China National Chemical Corp's (ChemChina) massive SFr43bn (US$43.45bn) bid for Swiss seeds and pesticides company Syngenta AG, which was the global M&A highlight of a volatile year. The recourse financing was the largest from Asia (ex-Japan) and was part of a bigger US$32.9bn debt package supporting ChemChina's acquisition, which still requires regulatory approvals. The debt also included a US$20.2bn non-recourse bridge loan at the Syngenta level. While Asian and European lenders participated in the recourse and non-recourse loans, opportunities for international banks to lend in event-driven loans for Chinese state-owned enterprises are shrinking as Chinese banks continue to step forward to lead the strategic segment."In 2016, we have observed the deal-corridor narrowing for foreign banks wishing to play in the corporate and LBO acquisition space, with the Chinese and Taiwanese banks playing a far more predominant role across the board," said Lyndon Hsu, head of leveraged and acquisition finance, Asia Pacific at HSBC. Some privately-owned Chinese companies used foreign lenders for their overseas forays. Chinese internet giant Tencent Holdings Ltd raised US$3.5bn in an acquisition financing in October from a group of 17 international and Chinese banks for its purchase of Finnish mobile gaming firm Supercell Oy.

The acquisition was Tencent's largest and also the world's largest buyout of a game developer. The financing was the borrower's debut M&A loan and followed the completion of two plain vanilla loans with tight pricing only a few months earlier. The financings backing ChemChina and Tencent's acquisitions, among others, boosted Hong Kong's loan volumes, which is a centre for offshore Chinese borrowings. Loan volume in the territory hit a record US$106bn, showing a 22% rise in 2016. China and Hong Kong were the only Asian loan markets to register activity of more than US$100bn, although overall China volumes fell 9.1% to US$135bn in 2016 despite the record M&A boost as the economic slowdown in the country took its toll. LIMITED GROWTH India was the star among major Asian loan markets, showing the biggest percentage increase in 2016, as the country's borrowers tapped offshore loans frequently with state-owned oil and gas companies and pharmaceutical companies raising funds for overseas acquisitions. Indian offshore borrowing of US$21.25bn in 61 deals was 37% higher than 2015's tally. Indonesian companies also relied heavily on foreign currency borrowing, which lifted the country's 2016 total to US$12.58bn, almost 50% higher than in 2015. Both markets reversed declines seen in 2015 as their corporates offered welcome diversification from lending to China, which has dominated regional lending since 2013. Japan posted an 8.5% increase in volumes to US$234.67bn, compared with US$216.33bn in 2015, as borrowers sought to lock in cheap long-term funding using hybrid loans in a negative interest rate environment.

Taiwan saw the biggest annual decline in 2016, dropping 27% to US$34bn as corporates grappled with a slowing economy, mirroring similar issues in neighbouring China. Loans from Greater China of US$285.22bn in 2016 were 2.1% lower than US$291.28bn raised in 2015. Australia saw lower activity for the second year in a row with lending dropping 8.4% to US$72.8bn in 2016, while Singapore was flat at US$38.68bn. Other Asian blue chip firms followed Tencent's example and were also able to reduce their borrowing costs tapping into a deal-starved investor base. Several high-grade credits including Chinese oil behemoth CNOOC Ltd, Indian state-owned oil & gas bellwether ONGC Videsh Ltd and financial services giant Blackstone Group, among others, visited the loan markets more than once during the year to raise funds, either for refinancing or for acquisitions."Liquidity conditions remained strong throughout the year, however subdued deal flow resulted in most loan investors struggling for assets to meet budgets. This supply-demand imbalance led to significantly competitive behaviour, which resulted in pricing tightening across most markets, with structures becoming looser and tenors being pushed out," said Lakhwani.

The year also saw rare borrowers such as the Democratic Socialist Republic of Sri Lanka, Hong Kong rail operator MTR Corp Ltd and Airport Authority Hong Kong, Malaysian banks Malayan Banking Bhd and Public Bank Bhd , Indian mortgage lender Housing Development Finance Corp, state-owned Bank Negara Indonesia, among others, giving lenders opportunities to gain exposure to quality credits. Most of these borrowers returned to the loan markets after several years to take advantage of lower pricing and abundant bank liquidity. Sri Lanka made an impressive return to the loan markets in September after an eight year absence to sign its largest syndicated facility after increasing a three-year loan to US$700m from a targeted size of up to US$500m. Earlier in March, the Islamic Republic of Pakistan and the Government of Mongolia also tapped loan markets, while the Independent State of Papua New Guinea followed in November with a debut US$200m five-year borrowing that is expected to be launched into syndication in January. ROAD AHEAD While Asian borrowers enjoyed benign loan market conditions in 2016, the year ahead poses more potential threats as the full impact of Britain's vote to exit the European Union, Donald Trump's victory in the US presidential elections and the US Federal Reserve's move to increase interest rates plays out across global financial markets. Industry participants are bracing for a different year in 2017 amid expectations of a further drop in China-related borrowing as the country continues to grapple with a slowing economy."After a lukewarm 2016 for the loan market dominated by China-linked issuance, 2017 looks set to be different with an expected rise in deal volumes from Southeast Asia and India and potentially lower China volumes, influenced by talk of greater control on capital flows and a slowdown in outbound M&A activity," said Amit Khattar, head of loan trading and syndication, Asia, at Deutsche Bank. Meanwhile, lenders' focus to generate returns amid tepid deal flow will keep pressure on pricing, as banks review their strategies and higher funding costs force them to continue culling customers or pass costs on."Banks continue to have excess liquidity to deploy and report that they are short on assets, meaning these conditions will continue into 2017, absent any major event," said Lakhwani."Loan pricing especially in US dollars could see a mild increase from 2016 reflecting increased US dollar cost of funds, while liquidity from investors will remain robust," said Khattar.