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And the Winner is….the Syndication Market
Last quarter, we went out on a limb, a pretty sturdy one we must confess, and called a turn in the downward trend in the syndication market, based upon a 9.8% increase in volume. Thankfully, we were correct, but the result was unexpected. According to Dealogic, for the twelve months ending in 2010, total syndicated shipping volume was $50.06 billion, an increase of 53.2% over 2009. The ancillary data provided by Dealogic strongly supports this revival, as well as an improving credit environment. As shown below, new money raised nearly doubled from the prior year but what is more significant is that it represented ~76% of new volume whereas in the prior year it was only 59%. The dollar amount of club deals was virtually unchanged, which had the effect of reducing the percentage of club deals as a portion of total volume from 42% in 2009 to approximately 30% in 2010. These trends can be seen in the enclosed graphs.
Sevan Gets an Early Start on the Holiday Season
Last Friday, Sevan Marine ASA successfully sold NOK 700 million of its 14% senior unsecured bonds due in 2014. This was the high end of the expected range (NOK 500 to 700) and reflects healthy investor appetite for the issue. Proceeds will be used for general corporate purposes. The joint lead managers of the transaction were First Securities and Pareto Securities with Arctic Securities, Fearnley Fonds and ING serving as co-managers. Further details of the transaction are shown below in the Guts of the Deal.
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TOO Follows-on Again
Once again utilizing its $750 million shelf registration, Teekay Offshore, on the heels of its August follow-on offering of 5.25 million shares, last week offered to the public a further 5.6 million common units. The units were priced at $28.74, a 4.4% discount to Thursday’s closing price of $29.11. A green shoe of 840 thousand shares has been offered to the underwriters. Proceeds will be used for general partnership purposes, including the acquisition of dropdowns from parent, Teekay. In the interim the partnership expects to use the proceeds to pay down a portion of its outstanding debt under various revolving credit facilities. More details are provided in out Guts of the Deal below.
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.
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.
US Capital Markets Fuel Corporate Activity – Wall Street Firms Execute For Clients
Marine Money Capital Market League Tables Highlight
DnB NOR, Deutsche, Citi and Jefferies
Marine Money’s survey of the global banking community in the spring told a dramatic story. Banks prefer lending to and doing business with public shipping companies. Transparency, performance and the simple fact that public company managements with their access to capital have been among the most active in the business – that activity of course translates into fees – makes the case that capital markets access and execution capability are important skills. We celebrate here the Capital Markets performance of the leading Wall Street banks and their first half contributions to the shipping community.
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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.
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OSG Goes the High Yield Route
Following its recent equity offering, OSG announced on Monday its plans to issue $300 million of unsecured senior notes due in 2018. Proceeds will be used to pay down the balance on the company’s $1.8 billion senior revolver due in February 2013 that bears interest at LIBOR + 70 bps. As of year-end, the revolver balance was $654 million and under its terms the facility steps down $150 million annually in 2011 and 2012 before the final maturity in 2013.
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Me TOO
On Tuesday, Teekay Offshore Partners L.P. announced that it too intended to raise equity by selling 4.4 million common units, while giving the underwriters an option to purchase a further 0.66 million shares to cover over-allotments. The deal priced the next day at $19.48/ unit, a discount of 4.98% from the prior day’s close. Gross proceeds of the offering will be $85.7 million.
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Here Come the IPOs
This week two IPOs, one dry and one wet, hit the road with well-known sponsors. First was the Genco inspired BDI play, Baltic Trading Limited, which was followed by Mr. Marinakis’, of Capital Products Partners fame, large tanker vehicle, Crude Carriers Corp. These followed quickly on the heels of the recent Scorpio offering.
BDI Proxy
This was one of the first opportunities we had to watch a road show presentation on the great equalizer, “RetailRoadshow” (http://www.retailroadshow.com/index.asp), a website designed to put retail investors on a level playing field with the institutions. The presentation of Baltic Trading Limited was expertly handled, as one would expect, by Peter G. and John Wobensmith, who will respectively fill the positions of Chairman and President of the new company.
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The Official Guide To Marine Finance Providers
Shipping Index
