ABN AMRO Finances Another KDB vessel

ABN AMRO Bank, Singapore Branch has recently provided pre-delivery and post-delivery senior debt facilities to a Panamanian single purpose company established under the Korea Development Bank Shipping Fund Program for the acquisition of a capesize class dry bulk carrier.

The carrier was sold to it by STX Pan Ocean and will be bareboat chartered back to the company on delivery and, subsequently, sub-chartered out to a Hong Kong leasing company. The Singapore office of Watson, Farley & Williams advised ABN AMRO Bank the lenders in this transaction.

Seoulful Solutions

Korea’s ship finance scene has witnessed a wave of important new developments of the past months. A recent visit to several key Korean financial institutions yielded some interesting insight into how the ship finance market in that country is rapidly evolving and where future opportunities may be under development.

Korea Development Bank (KDB) is rapidly preparing for its privatization in the next year. 110 experienced staff have been transferred from KDB into “grandparent” company Korea Finance Corporation (KoFC). These include Mr. DongHae Lee, who many may know from his previous role as Team Head of Shipping Finance at KDB where he played a key role in developing the Let’s Together Fund as well as in other transactions such as Marine Money 2009 Bank Debt Deal of the Year winners KOGAS I and KOGAS II. Mr. Lee has taken up as General Manager, Global Finance Department at KoFC. He is joined by Mr. Yongsung Yim, now International Finance Team Head, Global Finance Department at KoFC. Continue Reading

KDB Let’s Together Fund Finds Interest

Bank of Nova Scotia Asia and its syndicate of lenders have recently participated in Korea Development Bank’s shipping program. This is the first transaction effected under KDB Let’s Get Together Program, designed to enhance the liquidity of Korean shipping companies. 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

JBIC Beefs Up Export Credit Support For Shipping

All of us are well aware that a few governments in Asia hold the fate of shipbuilding and thus the orderbooks in their hands. China and South Korea’s strong support for the shipyards come as no surprise as governments tend to bolster industries of national importance. Support from the Japanese government for its shipbuilding industry has been rather muted. The Japan Bank for International Cooperation (“JBIC”) – the merged entity of Export-Import Bank of Japan and the Overseas Economic Cooperation Fund Japan for instance has not provided any export loans for the shipping sector in their fiscal year 2008. But this has changed.

Marine Net reported last week that JBIC has agreed to provide Turkish Bank, Turkiye Is Bankasi (“Isbank”), an export credit line of JPY 10 billion (USD 111 million) with the objective to assist Turkish shipowners in the financing of their newbuildings at the Japanese shipyards. This will be JBIC’s first export credit facility dedicated for the shipping industry. JBIC currently provides direct loans to foreign importers and financial institutions in the form of buyer’s credit (B/C) and bank-to-bank loan (B/L) to facilitate the financing of the imports from Japanese machinery and equipment manufacturers. Continue Reading

Step Up Asian Banks

As we fill in our deal tables week after week, we note that anecdotal evidence points towards local banks increasing their financial support to their domestic clients. In Thailand, Thoresen Thai Agencies (“Thoresen Thai”) has secured a USD 200 million three year term loan from a syndication of mainly Thai banks – Kasikornbank, Krung Thai Bank, Export-Import Bank of Thailand (“EXIM Thailand”) and Mizuho Bank, Bangkok Branch. We gathered that the pricing is set at 250 bps above LIBOR and the facility will be used to expand the company’s business in transportation, energy and infrastructure.

Thoresen Thai’s subsidiary Hermelin Shipping is currently in the process of acquiring Unique Mining Services (“UMS”) which is expected to be completed by mid December. The credit line will certainly come in handy if Thoresen Thai is able to make a full acquisition of UMS, estimated to cost at least THB 4.5 billion (USD 135.6 million). Established in 1994 and listed in the Market for Alternative Investment of Thailand since 2004, UMS is involved in the coal trading business through importing coal to the various industrial customers in Thailand. Continue Reading

Dynamic Busan: City Of Tomorrow

For the very first time in Marine Money’s history, the 3^rd Annual Korea Ship Finance Forum was held at the city of Busan, the heart of the world’s shipbuilding industry and the region home to seven of the world’s top ten shipbuilders. Prior to the event, delegates had an exclusive opportunity to visit the impressive Hyundai Heavy Industries (“HHI”) – the world’s largest shipbuilder. 240 delegates active in the Korean market gathered together and discussed on the today’s challenges and future opportunities.

The keynote presenter Dr. Keo Don Oh, President from the Korea Maritime University started the day by stressing the importance for China, Japan and Korea to work closely together. Dr. Oh noted that there have been discussions on the possibility of setting up a North East Asia Development Bank recently and he believes this could likewise be extended to the creation of a ship finance body to foster closer ties between shipping and shipbuilding industries in Northeast Asia. Continue Reading

Government Intervention

By Kate Lawrence

The classic, and contentious, Keynesian argument—whether or not intervention of government policies (and funds) aids in the security and success of markets—seems increasingly mute these days, as the international economic recession has motivated governments to pledge aid, fund stimulus packages, and rethink financial and tax programs for businesses across the board.

In the realm of shipping, the simultaneous economic and credit crises have had significant impact on the ability of certain registers to maintain their viability, calling in to question critical government policy changes as they pertain to industries with strong offshore and overseas bases.
The European Commission’s 2009-2010 Maritime Transport Strategy Communication has stressed the importance of pursuing appropriate government action to ensure the continuous performance of the E.U. maritime transport industry. This includes government support of European registers, which face increasing competition from ‘third country’ companies, which enjoy more the considerable financial and legal backing of their own governments.

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Let Us Get Together

The Korean shipping finance market remains challenging but it is heartening to note one Korean financial institution is thinking out of the box and supporting its core clients. On the second day of Marine Money Asia Week, we had the pleasure to listen to Mr. Dong Hae Lee, Head of Shipping Finance Team at the Korea Development Bank (“KDB”). Mr. Lee told the audience that Korean shipping companies continue to suffer losses from operations which have led to several cases of corporate restructuring and liquidation in the country. But the good news is there are several avenues for Korean owners and operators to strengthen their balance sheets now.

For the big boys, self help is important. Korea Line, Hanjin Shipping, STX Pan Ocean, Hyundai Merchant Marine, SK Shipping and Eukor Car Carriers have raised over KRW 2.93 trillion (USD 2.5 billion) from the domestic capital markets. And if the shipping company has secured Contracts of Affreightment (“COA”) earnings from the big freighters such as POSCO, KOGAS and KEPCO, asset-backed securitization and asset-backed loans can be arranged by the banks to enhance the operator’s liquidity position. In terms of sale and leaseback structures, both KDB and Korea Asset Management Corp (“KAMCO”) have introduced shipping funds to provide further financial support to the shipping industry.  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