Hk-Disney Syndication by Chase - 3889 Words

Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan Group 15 XIA Yidan, ZHANG Kuo, ZHU Shihuai, WANG Qian 2012 acer CHUK 2012/9/24 Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan Group 15 XIA Yidan, ZHANG Kuo, ZHU Shihuai, WANG Qian 2012 acer CHUK 2012/9/24 How should Chase have bid in the first round competition to lead the HK$3.3 billion Disneyland financing (Bid to win or bid to lose?) In the first round of competition, there are 17 banks competing to propose a mandate for syndication. How should Chase make the proposal to Disney depend on the following respects: (1) Disney’s requests (2) Evaluation of the returns and risks. Based on the previous two parts, design the†¦show more content†¦Second we analysis the macro economy of HK and the anticipated effect on Disney HK’s operating profits. As the â€Å"tiger† of Asia, Hong Kong has a free market economy—low taxes, unrestricted capital movement, stable HK$ linked to US$. What’s more, HK’s economy was based on services, tourism and trading. According to data in Exhibit1, the number of visitors is 1570 times its local population in 1999, with an amount of 10.7 billion. Although we see the financial crisis had an impact on tourism, but it recovered quickly—from 11.7 billion in 1996 to 9.6 billion in 1998 then back to 10.7 billion in 1999. We anticipate a furthe r recovery as the economy warm up. As a tourist resort, Hong Kong Disneyland has high profit potential. In a word, the relative exposure of credit risk is low. * Syndicate risk Hong Kong Disneyland asked for full-underwriting. If the syndication is not successful—under subscription, Chase would end up holding too much loans and higher credit exposure to the project. For example, if there is only one arranger and single-stage general syndication, the max exposure of Chase would be the total amount $HK 3.3 billion—in an extreme case when nobody comes to commit for the loan. However, a senior HK government official underscored the government’s commitment to the project at Asia Pacific Loan Market Association Conference, there is a high potential of success syndication since other banks observed the government’s backing on this project. What’sShow MoreRelatedCahse Manhattan Bank: Hong Kong Disneyland1416 Words   |  6 PagesMF 820: Management of Financial Institutions Hong Kong Disneyland Finance Ron Shell Jiang Jiang Zhaojie Wang On August 10th 1999, Disney awarded the sole mandate to Chase Manhattan Bank for the Hong Kong Disneyland financing of HK $3.3 Billion. We believe this decision was beneficial for both parties. For Chase, the rewards included underwriting fee, interest payments, being a part of a big loan-financing project in Asia and developing networks and relationships with Asian governmentsRead MoreCase Study Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan2763 Words   |  12 Pagesamong corporations to finance their projects. This report aimed at evaluating the process by which Chase Manhattan Bank (â€Å"Chase†) syndicated the HK$3.3 billion Hong Kong Disneyland financing. To begin with, a detailed analysis of the first-round bidding concerns will be provided, followed by a discussion on the ‘market flex’ terms in the standard commitment letter. After that, alternative syndication strategies will be examined, supplemented with the risk-return trade-offs of different structuresRead MoreCase Study: Chase’s Strategy for Syndicating the Hong Kong Disneyland Loan (a)2374 Words   |  10 PagesKong Disneyland Loan (A) Q1. How should Chase have bid in the first round competition to lead the HK$3.3 billion Disneyland financing? 1.Three ways to approach this deal 1) bid to win, 2) bid to lose and3) no bid. Chase chose to bid to lose on the first round, but just enough to make it to the short list. Also, since Chase is one of  Disneys relationship banks, Chase would not want to ruin this relationship by not bidding on their project. If Chase wanted to lead the competition from the firstRead MoreChases Strategy of Financing Hong Kong Disney4732 Words   |  19 Pagesassets and market capitalization, JPMorgan Chase is a major provider of financial services with assets of $2 trillion and according to Forbes magazine is the world’s largest public company based on a composite ranking. Being one of Disney’s top 10 relationship banks, Chase was the third largest bank in the United States with more than $400 billion of assets and $175 billion of loans in 1999, and was a leader in the field of syndicated finance. In 1999, Chase was the lead arranger for 34% of totalRead MoreChase’s Strategy for Syndicating the Hong Kong Disneyland Loan1161 Words   |  5 Pages1. Chase should have bid for the loan mandate in such a way to maximize the investment fee income after controlling for risks involved, and the client’s preferences for syndicated loan. Thus. Chase faced a trade off between Risks and rewards. We have to weigh out the risks with rewards as below Risks Involved †¢ Credit and Downgrade risk – This arises from the level of exposure that Chase would take in the HK$3.3 billion loan. Usually they put a limit of 10%. Thus Chase had to bid in such a wayRead MoreChase Disney Case1835 Words   |  8 Pagesï » ¿Chase-Disney Hong Kong Syndication Q1. How should Chase have bid in the first round competition to lead the HK$3.3 billion Disneyland financing? Why Chase initially intended to bid-to-lose? 1. The syndication term is long-term, 25 years tenor which banks did not like, and not as per the norm of the region’s syndications’ usual tenor of 3-5 years. 2. Disney land Paris struggles were still fresh in memory, and raised the default risk concerns for sponsors 3. 3 lead arrangers condition by the sponsorRead MoreChases Strategy for Syndicating the Hong Kong Disneyland Loan 2017 Words   |  9 Pages3035161097; KUTUZOVA, Ekaterina 3035162156; Disneyland - Chase Case Study Q1: How should Chase have bid in the first round competition to lead the HK$3.3 billion Disneyland financing? After being approached by Disney to raise HK$3.3 billion nonrecourse loan package on a fully underwritten basis, Chase had three options available to approach the deal: ï‚ · ï‚ · ï‚ · No Bid Bid to Lose Bid to Win Initially Chase decided to Bid to lose because Disney had been their important client however the deal did notRead MoreChase’s Strategy for Syndicating the Hong Kong Dis2615 Words   |  11 PagesThus, Chase had mainly three kinds of concern at that stage: risk, profit and reputation. Reputation From Exhibit 6, there is no doubt that Chase was the top bank in syndicated finance in the US and over the world. However, it recorded limited performance in Asian market though Chase had put numerous resources into its global group. At the same time, Chase was among Disney’s top relationship banks and Disney as well as its project in Hong Kong had a noticeable market signal. Thus, Chase should