Links
A Brilliant Coup for Singapore
Since its introduction in 2004 as a new business model, the business trust has not created the level of excitement initially envisaged by the authorities. The concept of business trusts was conceived after the success of real estate investment trusts and the idea was to provide investors an alternative option to derive an income yield based on the cash flows generated by assets, without any restrictions on the asset type.
Companies that are expected to securitise their assets via the business trust structure are likely to be asset heavy in nature such as transport and utilities. But despite the efforts in promoting this structure to companies and investors, there has been limited success. Today, you can still count the number of Singapore listed business trusts with your two hands. The three shipping trusts – Pacific Shipping Trust, First Ship Lease and Rickmers Maritime and a couple of infrastructure trusts – CitySpring Infrastructure Trust, K-Green Trust and Macquarie International Infrastructure Fund are among the few business trusts listed on the Singapore Exchange. But all could change for the better if Hutchison Whampoa’s plans to spin off its Southern Chinese port assets go through. Continue Reading
DVB’s Schiffspfandbrief
On Monday, DVB announced that its first ship covered bond issue or Schiffspfandbrief was successfully placed last week by joint lead managers, DZ Bank and Deutsche Bank. The bank issued EUR 250 million of three year 2.25% bonds, which were sold at 99.702%, equivalent to a spread of 50 bps over mid-swaps. The bond is collateralized by a pool of 56 eligible shipping loans, secured by first mortgages, of approximately $1.01 billion in principal amount representing a cross-section of DVB’s shipping portfolio. The cover pool consisted mainly of product tankers (21%), bulk carriers (18%), crude tankers (18%) and containerships (15%). The bonds were rated Aa3 by Moody’s. Purchasers, solely banks, placed 56 individual orders, with 90% placed in Germany and the balance in Austria and Luxembourg. By choosing this refinancing vehicle DVB has expanded its investor base and funding sources, which these days is a good thing.
“The Market Is Hot” – The Theme of Yield Continues
While the action in bonds this week continued in Norway, New York joined the fray with Ship Finance’s latest offering. The beauty of Norway’s market is its speed and simplicity but Wall Street is the place for longer tenor dollar denominated deals such as Ship Finance’s ten year senior unsecured offering.
The Secret Sauce
Last week, one company found the Wall Street magic. The secret may be quite simply that it’s all about yield. Investors found NCL Corporation’s private offering of $200 million senior unsecured notes due in 2018 so attractive the company upsized the offering to $250 million. And, while initial price talk was around 9.75% on the coupon, the company’s recent strong financial performance allowed the bankers to drive down the price to 9.5% for the bonds, which were sold at par. Achieving this coupon on a bond rated Caa1 by Moody’s is a testament to the company and its bankers who packaged an attractive deal to yield hungry investors. The eight year notes are non-callable for four years.
Combining Strengths – A Leasing Partnership
This week, Deutsche Bank, ICBC Leasing and V. Ships Capital announced that they were joining forces, in a yet to be name partnership, to build an independent ship leasing entity. The three companies hope to develop opportunities across the spectrum of shipping asset classes, deploying debt and equity with a view to creating a pipeline of assets which will be placed in leasing structures.
Serial Convertible Issuer – Seadrill Again
When it comes to financing his offshore drilling company, Mr. Fredriksen likes convertible bonds. With two issues already in place, $1 billion due in 2012 and $500 million in 2014, Seadrill Limited last week sold $650 million of senior unsecured convertible bonds. The original offering size was $550 million with an increase option of $100 million, which was exercised. As a large and regular seller of this financial instrument, which is particularly attractive to hedge funds, the company’s offer attracted strong demand and was oversubscribed within hours. Market talk indicates that there was sufficient interest at the $950 million level. Buyers included the usual investors interested in the offshore industry as well as a number of large buyers not typically found in the sector.
GE SeaCo To Top Fall Auction Action
Freshly Minted has learned from various market sources that GE SeaCo is considering a potential sale of the business. Similar sources point to Deutsche Bank getting the mandate to advise GE SeaCo on that transaction.
GE SeaCo is one of the world’s leading container lessors with a fleet of around 1 million standard and specialized containers, which they rent, lease and sell. GE SeaCo was created in 1998 by Sea Containers Ltd (since reformed as SeaCo Limited) and General Electric Capital Corporation, and is entirely self-funded. Operating as a stand-alone business, GE SeaCo has its headquarters in Barbados, with 13 sales and support offices worldwide.
SC to BOX – Seacube’s 2nd Attempt
Back in April, we wrote the following:
“Stripping off the baggage of its container ships and chassis, both unattractive businesses today, Seacastle Inc. has offered the public the opportunity to invest this time in its container leasing subsidiary through an initial public offering of that business, which they have named SeaCube Container Leasing Ltd. This is another example of a part that might be worth more than a whole as management recognized the recent outperformance of the publicly traded container leasing companies, Textainer and TAL International due to operating leverage. Trade has begun to resume which equates to more boxes coming on line, higher utilization and hence more revenue, with little incremental cost. In addition, given the financial constraints of the liner companies due to a very difficult 2009, it is likely that the lines will increase the portion of leased rather than owned containers in their fleet. From that standpoint, timing could not be better.”
EZ Pass – Navios Maritime Partners Returns for More
On Thursday, after the market closed, Navios Maritime Partners L.P. announced and the next morning it priced it latest follow-on offering. If only everyone found it so easy. It is not simply just the fact of being public. Performance, story and reputation are also crucial and make the process smooth and simple or so it appears. The partnership has already raised $134.6 million thus far this year and with the latest offering will bring the year to date total to $231.7 million.
In this instance, Navios Maritime Partners intends to issue 5.5 million common units at a price of $17.65 per unit, a 5.1% discount from the prior close. In addition, it will offer a green shoe of 0.825 million shares. Exclusive of the green shoe, gross proceeds will be approximately $97.1 million. Upon the closing of the offering, Navios Maritime Holding will own approximately 28% interest in the partnership, after giving effect to the 2% general partnership contribution.
Who Wants to Call the Turn?
We might. While the data may be considered slim and possibly distorted by the $6.75 billion A.P Moller-Maersk transaction, the nine-month 2010 Dealogic shipping data intimates a reversal in the downward trend in syndicated lending which began in 2007. Not only were the number of syndicated deals, volume and new money higher, club deal volume and numbers were down. The latter of course might just reflect deal size, where five of the top fifteen deals were in excess of $1 billion, but we will give the data the benefit of the doubt. In terms of specifics, the number and volume of deals for the 9-months of 2010 was 110 deals totaling $28.4 billion versus the one year earlier total of 90 deals totaling $25.9 billion. The best way to see the trend over time is to look at the data, which we show pictorially below. And, yes, you needn’t remind us that one point does not make a trend.
The Official Guide To Marine Finance Providers
Shipping Index
