Vinalines Places Bonds for USD 52 million

State-owned shipping and port operator Vietnam National Shipping Lines (“Vinalines”) sold VND 1 trillion (USD 52.08 million) bonds in the domestic markets for vessel acquisitions and new project development. The three year senior unsecured bonds carry an annual coupon rate of 14.5% in the first year, and floating coupon rates in the second and third years, to be computed based on the average 12-month deposit rate plus 3.5% per annum. We understand that domestic banks and investment funds were the primary buyers of these bonds and Standard Chartered Bank was the sole arranger and book runner for the bond issue. Continue Reading

Jasper Taps Bond Market

Last Friday, Singapore listed offshore oil and gas drilling firm Jasper Investments (“Jasper”) announced that it has added USD 75 million to its coffers, with the assistance from DnB NOR Bank ASA and Pareto Securities. The successful closing of this funding exercise will help to allay fears over its financial health previously highlighted by its auditor Foo Kon Tan Grant Thornton. Last month, the independent auditor raised a going concern issue on Jasper, drawing attention that the group’s current liabilities had exceeded its current assets by USD 56.1 million at the end of 31 March 2010.

The company explained that there is no need to be unduly worried, given that its existing current liabilities consist mainly of a loan from a Singapore bank that is secured against a mortgage on the drillship, the “Explorer”. As at 31 March 2010, the amount outstanding under the loan was USD 35 million against independent valuations of USD 280 million to USD 375 million, and therefore the security value is well in excess of the loan provided. Jasper further disclosed that this “local bank” has also increased the credit facility to USD 55 million at the end of last year. We believe that the effective interest rate for the loan is at 5.575% per annum. Jasper has no other third party borrowings other than the bank loan, and continues to receive material support from its controlling shareholders through the provision of shareholders’ loans of approximately USD 201 million. Continue Reading

Notes in Demand

Singapore listed marine services provider Ezra Holdings is raising new debt with the advice of DBS and HSBC. The three year USD 100 million unsecured guaranteed financing will comprise fixed rate notes and a transferable term loan facility. What is a transferable term loan? Simply put, it is a bank loan facility that can be traded between lenders. According to the Law of Multi-banking Financing: Syndications and Participations published by Agasha Mugasha, transferable term loan is a form of securitization that allows banks to trade loan assets, with the objective to improve the liquidity of the transferor banks and diversify lending risks.  

No details on the actual split between the two arrangements have been announced but marketing for the notes has commenced on Tuesday, with the institutional investors largely in mind. Proceeds will be used to finance new business opportunities and capital expenditure, possibly to fund the acquisition of the Crusader 2, an ice class DP3 well-intervention vessel. Continue Reading

Otto Marine Establishes MTN

Last Tuesday, Singapore listed Otto Marine established a SGD 500 million (USD 364.6 million) multicurrency term note (“MTN”) programme with arranger Standard Chartered Bank. This gives the shipbuilder the flexibility to issue notes from time to time in series or tranches in any currency as may be agreed between the arranger and the issuer. Each series of notes may also be issued in various amounts and tenors, and may bear fixed, floating or variable rates of interest. The notes will be unconditional, unsecured and unsubordinated and shall at all times rank pari passu with all other present and future unsecured obligations of the company.

To the issuers and investors, the main advantage that MTN has over bonds would be the flexibility of its structure and documentation. In other words, the issuer can potentially pay investors a lower yield by customising the notes in accordance with the features they demand. The issuer can likewise match the terms of the offering with its liabilities and ensure a smoother operating cash flow. The flexibility of MTNs also allows the issuer to take advantage of temporary market opportunities, since a new MTN with specific characteristics can be issued quickly. Continue Reading

Priced to Sell

Last Wednesday, Berlian Laju Tanker sold USD 100 million five year convertible bonds with joint bookrunners J.P. Morgan and RS Platou Markets. The bonds were priced to sell with an attractive coupon fixed at 12% and come with a conversion premium of just 10% and a one time reset after six months. The modest conversion premium could well suggest that BLT and its advisors are looking for a more equity like transaction, which will help improve its leverage risk profile in the medium term, should the bonds be converted into shares.

The proceeds from the offering will be used for, among other things, investments in the expanding cabotage trade in Indonesia, based upon its long-standing relationship with Pertamina and other oil and gas operators in Indonesia. The proceeds may also be used to repay or redeem existing debt, including outstanding convertible bonds guaranteed by the company, and for general working capital. BLT needs fresh capital to cover a potential put on its outstanding USD 125 million convertible bonds in May 2010. As we understand from RS Platou Markets, these proceeds are not expected to be used for the on-going acquisition of Eitzen Group. Continue Reading

Solar In Bond Offering

Market rumours indicate that Solar VLCC Corporation, a privately held company belonging to Mr. Nobu Su, is in the market for a three year USD 165 million bond offering. Proceeds from the senior secured bonds will be used to acquire two new VLCCs currently under construction at Daewoo Shipbuilding & Marine Engineering and the vessels will be operated by TMT upon delivery. The figures will represent a LTV of approximately 75% based on an estimated resale value of a VLCC newbuild at USD 110 million.

Yang Ming Wants Public Debt

Last Friday, Taiwanese boxship operator Yang Ming Marine Transport announced plans to issue up to TWD 5 billion (USD 157 million) worth of secured corporate bonds. The bonds will carry a fixed coupon rate with a maturity period of not more than 5 years. Proceeds will be used to repay existing debt. A listing of Yang Ming’s dry bulk subsidiary Kuang Ming Marine Transport is also on the cards. Continue Reading

A Silver Lining in the Bond Market

For the fortunate few, there lies the silver lining in the bond market. Records were shattered in 2009 in the Asian shipping bond arena with over USD 7.26 billion in new issuances. This is a historical high which represented an over 350% increase from USD 1.59 billion in 2008. Clearly, the need for capital has never been stronger as companies grit their teeth against the harsh operating environment.

Transactions in the Asian shipping bond market ran the gamut from the simplicity of straight unsecured issues to the complexity of Islamic debentures. Korean shipping companies top the list, by issuing bonds with 1-3 year maturity and interest rates of 7-8%. Hyundai Merchant Marine, Hanjin Shipping, STX Pan Ocean, SK Shipping, Korea Line and EUKOR Car Carriers have all tapped the bond market more than once this year, having raised over USD 2.9 billion in total. Top Korean issuer HMM raised KRW 1.06 trillion (USD 899.9 million) through eight bond issuances between February to November this year. Continue Reading

Red Alert

Last Monday, Hong Kong listed shipbuilding, tanker operator and oil storage group Titan Petrochemicals Group (“Titan”) has announced the appointment of Goldman Sachs (Asia) and ING Bank (Singapore Branch) to restructure its existing USD 315.4 million bonds due March 2012. This could potentially result in bondholders losing as much as 70% of their investments.

Titan is offering its bondholders USD 199 in principal amount of the new notes it plans to issue, in addition to 3,075 new shares in Titan and USD 12.50 in cash for each USD 1,000 held as the principal amount of the existing notes. Guaranteed on a senior basis, the seven year USD 400 million bonds were previously issued in March 2005 and have an outstanding principal amount of USD 315.4 million. Continue Reading

A Good Citizen

For the benefit of our readers in Asia, we reproduce some excerpts on First Ship Lease (“FSL”)’s suspended USD 200 million notes offering from our sister publication Freshly Minted before we take a little closer look at the motivations behind the shipping trust’s offering. 

“Philip Clausius is a committed man. He moved FSL to Singapore and has become a fixture in the shipping community. But even this was not enough. To further demonstrate his commitment and cement his presence locally, he has become a Singaporean citizen. So it came as no surprise that when the idea of a bond issue was broached, Mr. Clausius wanted a deal done that would tap both the Asian and U.S. investor bases, not just a straight 144A issue marketed to U.S institutional investors, which may have well been easier. Mr. Clausius understood that once established as a “local” issuer in Asia the rates would become highly competitive. Continue Reading