By Gabriel Chen

IT IS too soon to declare an end to the devastating credit crunch but credit conditions are certainly easing up, especially for bigger firms, local bankers said.

This gradual thaw is evident from the growing number of companies in Singapore which are successfully securing fresh bank funding, for example.

Other firms are refinancing maturing loans, or tapping the once-moribund capital markets by issuing bonds or equity to beef up their capital base.

Take global commodities trader Noble Group, for example, which announced this week that it has renewed, extended and raised its existing US$700 million (S$1 billion) revolving letter of credit and guarantee facility to US$800 million.

The tenor of the committed facility is two years. The size of the facility is US$800 million for the first year and US$770 million for the second year.

Noble's chief executive Richard Elman said it was a 'strong take-up' with the pricing 'competitive', and he was pleased to see its banking partners respond so positively during the downturn.

Noble is not the only company to find banks much more willing to dish out credit at arguably much better terms.

This week, Australian infrastructure firm SP AusNet, controlled by Singapore Power, said it has secured another three-year bank debt facility of A$50 million (S$58 million) to fund future growth capital expenditure.

Another firm to find the wheels of finance turning more freely this week is Singapore-listed China Energy, which announced it has entered into loan agreements for new credit facilities of up to 300 million yuan (S$63.5 million).

Bankers said large firms with good credit histories which seek to raise short-term funds from 'core relationship banks' - or banks that have had significant dealings with them - should not have too many difficulties.

'About six months ago, even major listed companies who were credit-worthy and very strong and wanted to raise $100 million or so had problems,' said Rabobank International general manager Goh Chong Theng.

The full force of the credit crunch was felt as recently as a few months ago. Asia-Pacific syndicated loans excluding Japan, for instance, tumbled 65 per cent to US$26.9 billion in the first quarter, according to Bloomberg data.

Back then, companies could get funding - it just came at sharply higher rates. For example, bankers said that when telco SingTel agreed to a $1.08 billion three-year loan in March to refinance existing facilities, it paid more than 10 times the interest of loans of similar duration it had signed three years ago.

Mr Goh said for longer-term loans, the rates might still be considered high by companies, as some foreign banks without the luxury of a huge deposit base, for example, are pricing in a hefty 'liquidity premium' into their lending.

He added that while the outlook is positive for larger corporates, it is still possibly 'more difficult' for small and medium-sized enterprises (SMEs) to clinch funding unless the loans are those where the Government bears some of the risk of default.

Ms Kavita Bedi, Standard Chartered Bank's general manager for SME banking, disagrees that SMEs find it harder to get commercial loans and said that it continues to see a balanced portfolio and healthy growth in both commercial and government-backed loans.

Only 993 government-backed loans - worth about $568 million - were disbursed in the first three weeks of last month. This was a sharp fall from April, when more than 1,800 loans worth about $1.06 billion were approved, mostly to SMEs.

This latest data could suggest that the banking sector has returned to its normal mode of issuing commercial loans to SMEs, industry watchers have suggested.

With stock markets rallying, more companies are also launching rights issues to boost their balance sheets.

'Moreover, credit markets are looking much better, which means we're beginning to see companies across Asia tapping into the convertible (bond) markets which were not there a few months ago,' said Mr Philip Lee, JPMorgan's chief executive and head of investment banking in South-east Asia.

Convertible bonds give buyers the option to exchange their bonds for shares in the issuing company looking to raise funds.

This article was first published in The Straits Times.