China Rongsheng Inks Another Massive Credit Facility

On Monday, Hong Kong listed China Rongsheng Heavy Industries Group Holdings signed a strategic collaboration agreement worth RMB 30 billion (USD 4.7 billion) with China Development Bank in the Chinese city of Nanjing. A large chunk of the facility will go towards its offshore engineering division. We note that Rongsheng has signed many similar corporative agreements with numerous Chinese lenders including China Exim, Bank of China, China Everbright Bank, China CITIC Bank and Agricultural Bank of China since August 2010, of at least total of over RMB 129.5 billion (USD 20.2 billion!).

We also have more details on Rongsheng’s recently completed USD 220 million offshore syndicated loan. Sole book runner Credit Agricole took up the biggest slice in the loan of USD 40 million while four lead arrangers Societe Generale, Aozora Asia Pacific Finance, Bank of East Asia and Bank of Tokyo-Mitsubishi UFJ committed USD 30 million each. Cathay United Bank chipped in USD 20 million. Italian bank Banca Monte Dei Paschi di Siena, Taiwanese lenders Chang Hwa Commercial Bank and Hua Nan Commercial Bank, as well as Metropolitan Bank and Trust in Philippines rounded up the syndication and contributed USD 10 million each. The loan offers the lenders a margin of LIBOR plus 130 basis points and is guaranteed by China Exim Bank.

China Rongsheng Inks Yet Another Massive Credit Facility

China Rongsheng has never failed to impress us with its ability to secure massive credit facilities from international and domestic lenders. Shortly after sealing a USD 220 million syndicated facility led by bookrunner Credit Agricole, the non-state owned shipbuilder has signed a credit facility with Agricultural Bank of China (“ABC”). This is the second credit facility that the shipbuilder has signed with the Chinese lender.

In the latest arrangement, ABC will provide China Rongsheng with a RMB 28 billion (USD 4.4 billion) facility, out of which RMB 20 billion (USD 3.1 billion) will go towards the development of its shipbuilding and marine engineering divisions while the rest of the funds will be used to invest in its machinery division.  If we tally up the figures, China Rongsheng has raised USD 6.3 billion of debt so far this year. That is mind boggling, given the weakening industry outlook and severe challenges faced by the shipbuilding industry. To date, China Rongsheng has an orderbook of USD 6.8 billion.

China Rongsheng Heavy Secures USD 220 million Syndication Loan

Hong Kong listed Chinese shipbuilder China Rongsheng Heavy Industries has successfully closed its first ever overseas dollar denominated syndicated loan transaction of USD 220 million, led by bookrunner Credit Agricole. The successful closing of facility has strategic importance to non-state owned shipbuilder, given the tighter regulations and capital controls imposed by the central government on the Chinese lenders. The Import-Export Bank of China (“China Exim”) played an instrumental role in this syndicated transaction as a guarantor for the facility and according to sources, over 10 overseas banks participated in this deal.

The latest and maiden foray into the international syndication market marks an important milestone in its history as the shipbuilder seeks to diversify its funding sources and reduce its exposure to RMB loans. No other non-state owned shipbuilder in China has been as successful as Rongsheng when it comes to securing debt from the Chinese lenders. In 2010, Rongsheng entered into a number of strategic cooperation agreements with Bank of China, China Eximbank, Agricultural Bank of China and China Everbright Bank with a total credit line of up to RMB 118 billion (USD 18.5 billion)! In June, Rongsheng also inked a RMB 11 billion (USD 1.7 billion) credit line from China CITIC Bank.

Shandong Ocean Investment Signs RMB 20 billion Credit Facility

Chinese State-owned Shangdong Ocean Investment Company (“SOIC”) has signed a RMB 20 billion (USD 3.1 billion) credit facility with Agricultural Bank of China to unlock Shandong province’s potential in the marine sector. According to overseas media reports, the investment company has secured funding commitments of over USD 323 million from various local and foreign financial institutions, and has since placed orders for seven newbuildings of a total 786,000 dwt with a number of Chinese shipbuilders. The ships are scheduled for delivery between September 2011 and October 2013. Earlier in March, the local government-backed firm has also acquired an 82,000 dwt Kamsarmax bulker for its shipping division, Shandong Marine.

The investment firm is currently working on a “blue marine fund” of a target size of RMB 30 billion (USD 4.7 billion) to bolster its financial position. The fund hopes to collect at least RMB 8 billion (USD 1.25 billion) in the first round of fundraising and is waiting for the approval from the National Development and Reform Commission. Proceeds will be used largely to invest in shipping and logistic assets, marine equipment manufacturing, marine bio-resources and eco-tourism.

Chinese Ship Finance – On Hold?

By Nigel Ward, Partner, Norton Rose LLP

In 2008/9 the Chinese banks were looked to as the only remaining hope for international ship finance – the last pool of bank debt that could be harnessed to replace the withdrawing European banks and to satisfy the capital requirements of owners with existing new building orders in the shipyards of the world. Just as many other countries, but on a larger scale, China responded to the global financial crisis by injecting significant liquidity into its domestic market.

A large part of that liquidity was funnelled through the public sector banks and much of it was deployed in support of infrastructure projects sponsored by regional and municipal authorities, to pump up domestic consumption and to fund state owned enterprises in support of export  manufacturing, business investments and the acquisition of strategic resources abroad. Continue Reading

Bits and Bobs on China

For everyone interested in China, we found some recent headlines that you might appreciate. Enjoy!

Hui Shang Bank Joins Hands with Dong Fang Shipbuilding: China Exim Bank is certainly not the only financial institution, offering domestic shipbuilders credit support. Based in Anhui province in China, the regional bank has recently provided RMB 250 million (USD 36.8 million) credit to China Dong Fang Shipbuilding. 

Pacific International Lines secures ECA Support: Old news but still relevant news! Pacific International Lines has joined the group of foreign shipowners who has successfully tapped Chinese ECA support. The second largest containership operator in Singapore secured a USD 517 million 10 year buyer’s credit from Bank of China in 2009. The Sinosure backed facility will be used towards its newbuilding orders at Dalian Shipbuilding Industry. This is also Bank of China’s very first ECA backed transaction for a foreign shipowner.   Continue Reading

A Noble Breed

Last week, our sister publication Freshly Minted reported on Maersk’s successful EUR 750 million (USD 1.3 billion) five-year bond. This was the shipping conglomerate’s first bond issuance, following a recent equity offering of USD 1.7 billion. In Asia, commodity trading house Noble Group has likewise found tremendous success in raising funds, suggesting that investors and bankers are getting warmed up to investing cash again. Continue Reading