Loan market shrinks in first half as firms turn to bilateral deals

Market raised $323.89b as cheaper funding options gained traction.

Hong Kong's syndicated loan market shrank in the first half of 2026 as borrowers increasingly turned to bilateral and alternative financing, according to the London Stock Exchange Group (LSEG).

The market raised $323.89b (US$41.3b) in syndicated loans during the first six months of the year, down almost 22% from the same period in 2025.

Mainland China recorded a steeper 61.8% decline to $156.85b (US$20b), with the two markets accounting for a combined 28.2% of syndicated lending across Asia-Pacific, excluding Japan.

LSEG said weaker global demand, geopolitical uncertainty, China's prolonged property downturn, and weaker business confidence reduced borrowing demand.

It added that more borrowers also opted for cheaper bilateral loans and alternative financing, limiting syndicated lending in Hong Kong and mainland China.

Across Asia-Pacific, excluding Japan, syndicated lending fell 20.2% year on year (YoY) to $1.71t (US$217.6b) in the first half, the lowest first-half total since 2013. The number of deals also declined 29% to 501 from 706 a year earlier.

Merger and acquisition financing emerged as a bright spot, rising 22.8% YoY to $187.43b (US$23.9b), supported by several large transactions completed during the second quarter.

LSEG said activity in the second half could be supported by a proposed $156.85b (US$20b) financing sought by ByteDance, the parent company of TikTok.

The report said the deal could become one of the largest offshore loans raised by a Chinese technology, media and telecommunications company.

It also noted that borrowers from the Middle East, which accounted for about $62.74b (US$8b) in loan volume, are returning to Asian lending markets.

On the mandated arranger league table for Asia-Pacific excluding Japan, Bank of China retained the top spot, followed by DBS Bank and OCBC Bank.

($1 = US$0.13)