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GMF Launches Badaro #14
Global Maritime Financing (“GMF”) has successfully closed its latest ship fund under the Ship Investment Company (“SIC”) Act in South Korea. This could well be the first SIC created since the financial crisis broke out in 2008. Market reports suggest that the fund Badaro No. 14 Ship Investment Co. raised 72 billion won (USD 63 million) and acquired a newbuilding 180,000 DWT Capesize bulk carrier at Sungdong Shipbuilding & Marine Engineering. The vessel upon delivery in May 2011 will be chartered to Hyundai Merchant Marine under the bareboat charter hire purchase (“BBCHP”) structure.
40% of the financing comes from a junior loan provided by local institutional investors and underwritten by Mirae Asset Securities while the remaining 60% is satisfied by a 5 year senior loan from Calyon (now rebranded as Crédit Agricole Corporate and Investment Bank). Korea Exim Bank provided the refund guarantee for the newbuilding. Continue Reading
Bank Debt Returns to Normalcy?
One of the major concerns on the minds of many would be the pile of toxic collateralized mortgage paper that remains on banks’ balance sheets and this will continue to restrict the banks’ ability to extend new credit. Likewise, shipping banks face the same tricky task of valuing the shipping assets on their books based on current market prices. Basel II requires banks to set aside more capital to riskier assets whenever the security cover reduces, and this could potentially limit capital for lending. The process of writing down book values has yet taken place and moving forward, it is absolutely crucial that bank losses on shipping remain limited or the industry could risk losing a number of lenders. There has already been a material contraction in ship lending capacity among major shipping banks.
2009 has been a busy year for the ship financiers, not so much for lending but more in terms of restructuring and workouts. Lending terms as one would expect have become more stringent in 2009 and not only has the advance rate been lowered to 50-60%, banks prefer shorter tenors between 3 and 5 years. This is in stark contrast to the 10 to 12 year tenors banks were offering shipowners during the shipping boom just a couple of years back. Bankers call this a return to basics. Continue Reading
Watson, Farley & Williams LLP Advises in High Profile KOGAS Project Financing
The Singapore office of Watson, Farley & Williams LLP (“WFW”) advised on the high profile Korea Gas Corporation (“KOGAS”) refinancing for three 1999 built LNG carriers. The 138,200 cbm built LNG carrier “Hanjin Muscat” is on bareboat charter to Hanjin Shipping Co., Ltd, the 138,100 cbm built LNG carrier “SK Summit” is on bareboat charter to SK Shipping Co., Ltd. and the 135,000 cbm built LNG carrier “Hyundai Technopia” is on bareboat charter to Hyundai Merchant Marine Co., Ltd. All three LNG carriers are operating under long term contracts of affreightment with KOGAS. Continue Reading
DBS Finances Oiltanking Odfjell Terminal Singapore
Oiltanking Odfjell Terminal Singapore Pte Ltd has signed a 6 year syndicated term loan facility of SGD 200 million (USD 138 million) via a club deal by DBS Bank Ltd, Calyon, and Oversea-Chinese Banking Corporation Limited. DBS Bank Ltd was the sole Bookrunner. The proceeds from the 6 year facility will be used to refinance existing loans and to finance the company’s expansion project on Jurong Island. OOTS is one of the very few companies in Asia who has been able to successfully tap the syndication loan market for a facility with tenor of more than 5 years.
Oiltanking Odfjell Terminal Singapore Pte Ltd is a 50/50 joint venture between Oiltanking GmbH and Odfjell SE. OOTS, incorporated in December 1999, owns and currently operates a 226,000 cubic metre (cbm) chemical storage terminal in Jurong Island.
More Normal?
Dealogic released its first half tables on Wednesday and they resembled, at least in terms of names, what we more typically expect, particularly in the case of the bookrunner table. Nevertheless, the newcomers from the 1st quarter did retain positions on the leader board. Total deal value grew to $17.5 billion comprised of 50 deals, versus the year earlier $43.1 billion comprised of 165 deals, continuing an expected trend. However on a quarter over quarter comparison, transaction volume declined a substantial 47.3% this year marking an even more worrisome trend.
The top 20 bookrunner table underwent the most change as it filled out from 8 banks in the first quarter to 17 in the first half. SMBC held on to first position increasing its volume by 71% and its market share to 6.5%. Nordea returned jumping to 2nd place with a 3.5% market share. SBI Capital fell to 3rd place with Mizhuo and DnB NOR rounding out the top 5. DnB Nor’s placement is significant and representative of its size and importance as its lending, oft repeated, is strictly limited to run-off. In addition to Nordea, the usual European suspects are back, including KfW, BNP Paribas, HSBC, Deutsche Bank, Citi, SG CIB and Calyon. RHB Investment Bank of Malyasia and Axis Bank of India were new entrants and added to the already significant Asian representation.
Bottoming Out?
Over the past week, we have experienced the first market rally from a recession trough. Asian stock markets rallied to some of their highest since mid October as investors take confidence in China’s economic recovery. The manufacturing purchasing managers’ index in China rose from 44.8 in March to 51.1 in April, passing the 50-point mark that separates contraction and expansion for the first time in 9 months.
In a market report published last Friday, JP Morgan presented an optimistic view, suggesting that “we are indeed very close to the bottom in global economic activity, and may already be there, with the world economy set to start expanding again in coming months” but acknowledged that there are still many inherent risks since banks and households are still in balance sheet repair mode and a swine flu pandemic cannot be ruled out. Continue Reading
For the Right Credit, Anything Is Possible
Euronav announced this week that it has signed a $300 million senior secured facility with Nordea, Calyon, Societe Generale, Bank of America and Scotiabank acting as lead arrangers; Nordea, Calyon and Societe Generale acting as bookrunners and Nordea as sole facility agent. Skandinaviska Enskilda Banken, Dexia Bank, Fortis Bank Belgium and Ethias acting as co-arrangers. The credit facility will finance two VLCCs: the Olympia (2008 – 315,981) and the Antarctica (2009 – 315,981 dwt) and four Suezmaxes: the Cap Felix (2008 – 158,764 dwt) and the Cap Theodora (2008 – 158,800 dwt) and two newbuilding Suezmaxes: hull 1743, to be named Felicity, (159,000 dwt) and scheduled for delivery in June of this year and hull 1744, to be named Fraternity (159,000 dwt) scheduled for delivery in November of this year.
Let the Stakeholders Speak
During our conference in Hong Kong, the panel titled “Stakeholders Unite: Owners, Investors & Lenders on What Comes Next” generated a lively discussion on the many issues revolving around shipping today including the role of private equity in shipping, China’s increasing dominance in the global supply chain and the funding gap of the global orderbook. We bring you some of the highlights. Continue Reading
The Kiran Holding $440 million syndicated loan Celebrated along Bosphorus
While shipping bankers in Norway at Marine Money’s Oslo event were expressing concern that bank funds should not automatically be counted upon in the current environment, Kiran Holding held a Gala Dinner celebration in Istanbul on Tuesday, 27 May 2008. Some 70 people attended. Guests enjoyed a cruise along the Bosphorus up to the trendy waterfront A’jia Restaurant on the Asia side, where banking support of shipping was very much in evidence. As we reported in FM last week, Kiran Holding signed one of the biggest syndicated loan deals in the history of the Turkish maritime sector, securing a $440 million facility with a most impressive syndicate of banks including: Bank of Tokyo-Mitsubishi UFJ, Calyon, Emirates Bank, HSBC, ING, Lloyds TSB, MashreqBank, Royal Bank of Scotland, Deutsche Shiffsbank Dekabank Deutsche Girozentrale, and Fortis Bank. Eurofin also acted as advisor to Kiran Holding.
According to Kiran Holding Vice President Tamer Kıran, the loan will be used to re-finance the Kiran Asya, a 2005 built 66,000-dwt vessel, and the 29,000-dwt Zeynep Kiran, which was built in 2001. The remainder of the loan will be used to cover the expenses of six newbuildings the Group has ordered from shipyards in China. The loan also provides $100 million in performance guarantees.
Commenting to the gathering of bankers and friends, Kiran Holding Vice President Mr. Tamer Kiran, “I would like to thank [our banks], which have all trusted both in us and our project and participated in this magnificent deal. A deal which proves that even under the current difficult credit conditions of the industry, good projects of good companies can still be financed by committed shipping banks.”
Mr. Lambros Varnavides, Managing Director, The Royal Bank of Scotland Plc, who could have been speaking for all the banks, stated, ” Kiran Holdings is set to be one of the biggest Turkish shipping powerhouses”
Marine Money notes with fondness the age-old story of the company’s origins, a story that can be seen in the best shipping companies all over the world, and that even at a moment of corporate achievement need not be forgotten.
Turgut Kiran, Honorary Chairman, told the audience, “My father was a much loved and highly esteemed mariner. Having lost him at a young age, I grew up listening to stories about him. Perhaps, this is why I was drawn to the marine world. Our children have learned the business well. We started in 1959 with 2-3 people and today we have 1,500 employed”
The theme is important to shipping worldwide as it evolves for the future. Mr. Kiran added, “Kiran Holding has always been committed to modern corporate values; with its strong determination of moving forward and achieving the best at all times and under all circumstances. Our foremost purpose is to create a more institutional, professional and higher level grounds for future generations as one of the leading brands in the Turkish marine sector.”
Surveying the Credit Markets
Marine Money has concluded the collection of data for its 2008 shipping banker survey and would like to sincerely thank all who have participated. We are currently concluding work on our annual shipping portfolio league table and would like to thank the following banks for their cooperation and contribution to the development of a transparent and well-informed ship finance industry: Bank of Ireland, Bank of Scotland, Bremer Landesbank, Calyon, Commerzbank, Danish Ship Finance, Danske Bank, Deutsche Bank, Deutsche Schiffsbank, DnB NOR, Dresdner Bank, DVB, Helaba, HSH Nordbank, HVB, JP Morgan, KfW, Lloyds TSB, Natixis, Nordea and RBS. If you don’t see your bank’s name on the list, think it belongs there, and haven’t been in touch with us this weekend, please send an email to nhuvane@marinemoney.com ASAP to ensure you are included. Both survey and portfolio data will be released in the upcoming May issue of Marine Money.
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