GGS Bond Starts a Resurgence of Capital Raising

A recurring theme of this year is the ease with which the offshore sector can raise capital even in this difficult market. The last two weeks have been no exception. During the first week of November, Petroleum Geo-Services ASA announced an offering of $300 million senior unsecured notes due in 2018, which would be guaranteed on a senior basis by certain of the company’s subsidiaries. The notes were priced a week later with a coupon of 7.375% and issued at 98.638% to yield 7.477%. Proceeds will be used for general corporate purposes and may include the re-purchase of the outstanding principal amount of its existing convertible notes. With little disclosure from the company, we were only able to learn that Barclays led the deal and DnB NOR Markets was one of the co-managers on the transaction.

Even Big Boys Get the Blues – A.P Moller-Maersk Bides Time

Market reports suggest that A.P Moller Maersk has postponed a planned EUR 1 billion bond issue due to poor market conditions. Led by Barclays, ING, J.P. Morgan, Mitsubishi and Nordea, the roadshow for the 10-year bond was to have begun on May 31 but never transpired. Analysts attribute the delay to a poor corporate bond market which is struggling with the Greek debt crisis among other issues. Following its desire to diversify its funding sources, Maersk has been a recent and regular visitor to the bond market beginning with its debut in 2009, a 750 million Euro issue. This was quickly followed by a NOK 4 billion issue and last November by a 500 million Euro 7-year issue. No worries here as the markets will certainly right themselves and in the meanwhile we are certain Maersk has sufficient liquidity to meet its needs.

APM Goes Back to the Bond Market

Having had its first taste last year, A.P. Moller-Maersk (“APM”) returned to the public bond market a couple of weeks ago, issuing EUR 500 million of 7-year bonds with a coupon of 4.375%. The net proceeds will be used for general corporate purposes. Unsurprisingly, investor interest was strong with the bonds being more than three times oversubscribed. As a point of comparison, last year’s issue of EUR 750 million 5-year bonds carried a coupon of 4.875%.  Placed by Barclays Capital, BNP Paribas, Danske Bank, HSBC and RBS, the bonds will be listed on the Luxembourg Stock Exchange.

Continue Reading

The Right Product for the Right Time – Teekay Offshore Follow-on

Last week, the Wall Street Journal reported on the “Frenzy in Energy Partnerships”. “Lured by hefty yields, investors are pouring billions of dollars into a small corner of the stock market – energy focused master limited partnerships – which has seen a huge rally of 15% this year.” This has caused concern, as these gains are not the result of a meaningful change in fundamentals but simply the consequence of a rush of new money into the sector. This should come as no surprise as investors seek safe havens for their cash and, in this instance, are rewarded with yields, a portion of which may be tax free, well in excess of Treasuries.
Continue Reading

Equity Appetite Remains Strong

On Monday, Capital Product Partners announced that it planned to offer 5.8 million common units in a public offering. The transaction was priced the next day at $8.85 per common unit ,a discount of 6.25% from the prior day’s closing price. Proceeds will be used to acquire the M/T Atrotos, a 48,000 DWT product carrier built in 2007 from its sponsor, Capital Maritime & Trading, for $43 million and for general corporate purposes. Chartered  to Arrendadora Ocean Mexicana for $19,900 net per day, the vessel is sub-chartered to Petroleos Mexicana for five years. Operating costs for the period are fixed at $3,575 per day, which is a very competitive cost even for a modern ship.
Continue Reading

All Eyes Are On Genmar

We know that General Maritime’s dynamic duo, Messrs Georgiopoulos and Pribor are on the road marketing their $300 million senior unsecured notes offering due in 2017 and so, while they are busy selling we thought we would take a read of the high yield market.

Earlier this week, Navios Maritime Holdings closed its successful $400 million private offering of first priority ship mortgage notes due in 2017. Rated BB-/Ba3, the coupon on the notes was 8.875% and was priced to yield 9.125%. The company escrowed $105 million of the proceeds to provide additional financing to complete the purchase of two new vessels with the balance used to repay existing credit facilities.
Continue Reading