China Shipping Nauticgreen Shelves USD 192 million IPO

World stock markets around the globe continue to fall sharply since Standard & Poor’s downgraded American debt for the first time in history last Friday, as fears that the twin debt crises in the US and Europe could drive the world economy into recession continue to shake investors’ confidence. Others believe that the markets are over-reacting and have accused large individual investors of “coordinated short-selling attacks” and preying on fragile market sentiments, which have prompted some countries to look into implementing a total ban on naked short selling, in order to stabilize the stock markets.

Without surprise, the market volatility has forced several IPO issuers to delay or drop plans to raise equity. China Shipping Nauticgreen, the container leasing unit of state-owned China Shipping Group, has postponed its plans to raise up to HKD 1.5 billion (USD 192 million) in Hong Kong, until market conditions improve. This decision was made despite the fact that the appointed bookrunners, China Merchants Securities and Deutsche Bank, were able to sell the entire institutional tranche after two days of book-building that began on August 1. Continue Reading

Asian Shipping Bond Volume Falls 46% in 2010

In 2009, bonds came back in financing vogue for the shipping industry, with total volume in Asia reaching a record USD 7.6 billion. But a few questions have since been lingering at the back of our minds: “Will this trend continue in 2010? And have the investors gotten too far ahead of themselves and forgotten about the painful corporate bond defaults in 2000/2001?”

As we compile our list of shipping bonds concluded in 2010, some interesting findings are revealed. Total shipping bond volume in Asia has surprisingly declined at a larger pace than expected, down by close to 46% to USD 4.1 billion last year from USD 7.6 billion the year before. But before we hastily conclude that the access to bond money is fast disappearing, the sharp decline can partly be attributed to a number of market specific reasons. 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

Direct From Qingdao

Marine Money flew to Qingdao to attend COSCO’s World Shipping Summit last week. We found the speech delivered by China’s Minister of Transport, Li Shenglin, sprinkled with useful facts on China’s burgeoning maritime industry. 

-          China is emerging as a key maritime nation after 60 years of rapid development. China’s fleet is ranked 4^th in the world, with 184,000 vessels of all types or an equivalent of 124 million DWT. Continue Reading

Our Intrepid Asian Traveler Reports From Qingdao

We admit to a healthy respect and some awe at the economic might flexed daily in the Asian world. The constant clang of steel in Singapore’s development, the sheer size of HK’s real estate development, the Rolls Royce style quality of an Imabari 28k handy, or the spread of newbuildings at Hyundai Heavy – so many it dwarfs the number of big commercial ships built in the entire US throughout this writer’s entire career.

This week Qingdao, with its vast and historic port, its world class clients and shipping partners hosted Cosco‘s World Shipping Summit (please note the organizers in perhaps a nod to modesty call it the World Shipping (China) Summit – believe us China is an identifier not a limiter!) and out did them all for these two days. 900 guests, every major liner company, financial institutions, yards, ports, railroads, government ministries, trade associations came and were delighted.

The hospitality was delightful but the messages of confidence, recovery, environmental protection and the enormous value of open world trade were powerful. And for those who know Captain Wei Jiafu know also the passion, conviction and energy with which they were delivered.

Partnership, customer service, innovation, corporate alliances and repeated calls for scrapping served as inspiration.

Continue Reading

Bits And Bobs On China

China remains abuzz with activity and anecdotal evidence suggests that Chinese buyers are once again increasingly active in the S&P market. One reason could be that opportunities to pick up distressed assets from shipyards, owners and banks have been surprisingly few, which have prompted people to pay closer attention to the deals available in the market. Continue Reading

The China Story

The hammering and digging begin at sunrise and last well beyond sunset. Beneath the dust and dirt, Shanghai is making ready for its quest to become an international financial centre and shipping hub by 2020. Gazing at the iconic view of the Bund and the Pudong skyline across the Huangpu River, it is not hard to understand why Shanghai is a natural choice as a maritime hub. Ideally located on China’s east coast and the major East West trade routes, Shanghai serves as a major transportation hub for the Yangtze River Delta and is China’s most important gateway for foreign trade. Marine Money trotted to this magnificent city last week to understand the current challenges faced by the Chinese shipping community.

Much has been written in the press on the central government’s aggressive support for the shipyards, highlighting concerns that the excessive state financial intervention could endanger the commercial viability of many ocean shipping companies going forward. The government is well aware of the problem of overcapacity in the shipping sector, but at the same time, it simply cannot allow her core shipyards to fail. The economic and social costs will be too overwhelming to manage. But if we take a closer look, many measures introduced by the central government in reality are largely tailored for the more established shipyards and very few financial incentives have been rolled out for either the small and medium local shipowners or the smaller shipyards. Continue Reading

COSCO Cancels at Its Own Yard

Meanwhile, a rather intriguing development started to unfold at COSCO. COSCO Corporation – the Singapore listed shipbuilding arm of the Chinese shipping conglomerate has announced this week that its parent COSCO Group has out-rightly cancelled eight 57,000 dwt bulk carriers and re-scheduled the delivery of another three bulk carriers of the same size. The cancellations from the parent caught analysts by surprise and many have expressed concerns over the financial impacts on the shipbuilder. COSCO Corporation says the buyers will not pursue the late delivery claims and all deposits will be returned. The total value of the cancelled orders is SGD 298.7 million (USD 205 million).

The three re-scheduled vessels that were supposed to be delivered between June and December last year will be delivered August 2009 and October 2009. Considering that the delivery was long overdue and there were no prior disclosures on the delays, investors have ample reasons to worry about the shipyard’s transparency.

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

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