A Growing Chinese Ship Financier

Asian banks tend to have a domestic or regional focus with a relatively limited role in global ship finance, but it is always our belief that the crises of global disequilibrium have provided them with the opportunity to gain prominence over the medium and long term. Last year, for the very first time, ICBC reported their shipping loan portfolio figures to Marine Money and we view this as the result of the increasing confidence the bank is eluding in its ship financing business.

This year, we are delighted that ICBC has once again provided us with their shipping loan portfolio figures at the end of 2009, and despite the challenging market conditions, ICBC managed to grow its book by 115% from USD 2.2 billion in 2008 to USD 4.74 billion last year. In terms of assets, bulk carriers form the majority 59.4% in the portfolio while container vessels and tankers took up 19.2% and 16.3% respectively. 2009 was a difficult year but ICBC remained supportive to both its foreign and domestic shipping clients with good track records and sustainable business models. Continue Reading

Chinese Money

China has many intrinsic reasons for supporting the shipyards – either by offering direct loans to the yards or to their clients. The labour intensive shipbuilding industry uses steel from Chinese steel mills, which is another important source of employment for many people. Since its establishment in 1994, China Exim Bank has played an instrumental role in supporting China’s maritime industry, having granted shipping/shipbuilding related loans of over RMB 116.8 billion (USD 17.1 billion) in the domestic currency and USD 8.5 billion in greenback at the end of 2009. The bank has supported the financing of 3,722 China built vessels of an aggregate tonnage of 120 million dwt and moving forward, China Exim Bank will continue to assist shipyards in stablising their orderbooks and secure new orders through the provisions of seller’s credit and buyer’s credit, payment guarantees and advance payment refund guarantees.

This year, the policy bank will be focusing its attention on providing financial support to promote mergers and acquisitions among the shipbuilders, encourage them to move into higher end ships such as LNG and offshore construction vessels and invest in new shipbuilding technologies. These initiatives are very much in line with the policy guidelines stipulated by the Chinese State Council last year. Continue Reading

Bank of China in Action Again, What’s New

Bank of China has extended a USD 179.55 million buyer’s credit facility to STX Pan Ocean recently in relation to the South Korean shipper’s acquisition of three 17,600 DWT bulkers ordered at Jiangsu New Century Shipyard. Jiangsu New Century Shipyard is one of the largest private shipbuilding groups in China who has built over 100 ships for owners in Denmark, United Kingdom, Germany and Italy. This successful transaction was initiated by Bank of China’s branch in Jiangsu province, upon news of STX Pan Ocean’s difficulty in securing finance for the ships. This year, STX Pan Ocean has earmarked USD 203 million to invest in 6 vessels. Continue Reading

ECA to the Rescue

Undeniably, export credit agencies (“ECAs”) has played an important role in satisfying part of the financing gap needed by the shipping industry. In China, China Exim Bank plays an instrumental role in supporting the maritime industry, having granted shipping/shipbuilding related loans of over RMB 102.5 billion (USD 15 billion) in the domestic currency and USD 7.45 billion in greenback at the end of 2008. In 2009, the policy bank extended a USD 389 million, 12 year secured facility to New York listed Overseas Shipholding Group (“OSG”), in its first ever loan facility to a US company. It would be nearly impossible to secure a 12 year ship finance loan today, let alone this quantum from a single financial institution. Continue Reading

Setting Sights on Overseas

Danish shipowner Torm has signed a ten year USD 167.3 million loan facility with a syndicate of banks led by Bank of China and Societe Generale. The funds will be used to cover 60% of the cost of six 53,000 dwt MR product tankers, each ordered at USD 46.5 million a piece from Guangzhou Shipyard International. Out of the USD 167.3 million facility, USD 83.7 million will be unsecured loans and the other USD 83.7 million in the form of buyer’s credit. This is also the very first time in a foreign syndicated loan that China Export & Credit Insurance Corporation (“Sinosure”) will underwrite the country risk in relation to the buyer’s credit. Torm will have to fork out the remaining 40% equity. Continue Reading

Asian Shipping Bond Issuances Hit USD 7.3 Billion In 2009

With bank debt being still hard to come by, the bond market for shipping companies in Asia continues to be active with transactions that ran the gamut from the simplicity of straight unsecured issue to the complexity of Islamic debentures. Bonds have become an extremely important source of capital for both shipbuilders and shipping companies in Asia and many are still working hard to seize this fund raising opportunity before any sudden changes in investors’ risk appetite. Continue Reading

In a Sweet Spot

Demonstrating once again that state-owned shipping companies have no lack of access to funds, China Shipping Group has signed a strategic cooperative agreement with Bank of China in Shanghai last week. The Chinese banking conglomerate will provide China Shipping a RMB 80 billion (USD 11.7 billion) credit line and this is the third agreement that China Shipping Group has concluded with the domestic banks. Continue Reading

The China Story Continues

Trying to get a sense of how huge the ship finance market in China has always been a daunting challenge for us. The domestic banks are highly competitive and remain guarded when it comes to disclosing their ship finance transactions. In our quest to make the market more transparent, we are very pleased to make some progress. This year, for the very first time in history, Industrial and Commercial Bank of China (“ICBC”) shared with us the size of their shipping portfolio in our annual bank debt survey. And likewise, for the very first time in Singapore, we are very grateful to Ms Helen Zeng, Senior Relationship Manager from Bank of China (“BOC”) for taking time off her busy work schedule in Beijing to share with us her views on the Chinese market at our conference.  Continue Reading

All Eyes on China

In the last edition of Marine Money Asia, we reported that Yantai Raffles has secured USD 150 million from China Development Bank. This week, we have another transaction that involves a Chinese bank supporting Chinese shipping interests. Bank of China (“BOC”) has sealed a cooperation agreement with state owned China State Shipbuilding Corporation (“CSSC”).

Under the terms of the agreement, BOC will provide CSSC a credit line of RMB 80 billion (USD 11 billion) to support the latter’s businesses in shipbuilding and ship repair. In addition, BOC will leverage on its buyer credit business to support CSSC’s exports. BOC has been an instrumental player in the development of the Chinese shipbuilding industry. All in all, the bank has provided domestic shipbuilders with over RMB 130 billion (USD 19 billion).

An Update on Stimulus Packages

Over the past year, the massive economic stimulus packages put together by policymakers around the globe have been grabbing the headlines, most notably from the United States, China and Japan. According to the latest estimates from IMF, Asian governments have pledged to pump over USD 950 billion into their economies through increased expenditure, tax cuts and cash hand-outs. And if we look closer at the figures, we would notice that fiscal stimulus in Asia is larger than other parts of the world. China, Japan, Singapore, South Korea, Taiwan and Malaysia have all announced fiscal packages of more than 4% of GDP, twice as large as US’s stimulus this year.

Many governments in Asia have come up with plans to lend a helping hand to the shipping or shipbuilding industry – sectors that they consider to pivotal to their country’s economic well being. Continue Reading