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Dynamic Busan: City Of Tomorrow
For the very first time in Marine Money’s history, the 3rd 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.
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
Let’s Together Shipping Fund
Korea Development Bank has established a KRW 2 trillion won (USD 1.6 billion) distressed asset fund to support the domestic shipping industry. We will be providing more details as well as a highlight on the differences between KDB’s fund and state-run debt-clearing agency Korea Asset Management Corp (Kamco)’s fund in the next issue of Marine Money Asia. Stay tuned.
Fun Raising Continues
As economists struggle to reach a consensus on whether the global economy has indeed begun a sustainable recovery or this is simply a slower pace of contraction, investors are just befuddled by the strength and endurance of the present stock market rally. But one thing is for sure, shipping companies are wasting no time in taking advantage of this broad-based improvement in market sentiment.
In Japan, Mitsui O.S.K. Lines (“MOL”) issued two series of secured straight bonds – bonds number 11 and bonds number 12 last week and raised over JPY 50 billion (USD 528 million). The first tranche of five year JPY 30 billion bonds carries an annual coupon of 1.278% while the second ten year JPY 20 billion tranche pays investors 1.999% annually. The funds will be used to repay existing borrowings and for the redemption of commercial paper. Both Rating & Investment Information and Japan Credit Rating Agency have assigned AA- to the bonds, acknowledging that the company’s well diversified earnings have a strong capacity to recover in a market turnaround. The bonds, although unsecured, come with a negative pledge. At the same time, the company is said to be in the market for a three year JPY 15 billion (USD 156 million) loan with SMBC as the sole bookrunner. The loan is priced at 30 bp over 6-month TIBOR (Tokyo Interbank Offered Rate). MOL expects some signs of recovery in summer this year and is implementing its JPY 40 billion group-wide cost reduction measures to secure stable long term profits. The ability to secure incredibly low cost funding and execute rapid fleet reduction will prove to be critical for the company emerge stronger in face of the crisis. Continue Reading
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
Marine Money in Seoul, with KDB and Miami with DVB
Marine Money is deeply grateful to our partners, all our vital sponsors, speakers and attendees. We have seen the beneficial impact of our Marine Money gatherings around the globe this fall as the economic challenges besetting nations are tackled on a micro level by the world’s most experienced international traders – the shipping industry and its capital sources. Watching the machinations of a single industry find its way forward as we have in Ireland, Greece, New York and Singapore, fills us with confidence that our corner of the global financial malaise will be well dealt with. We salute all our readers, delegates, sponsors and valued partners for standing up to challenges which daily seem to bring other industry’s to the government trough.
The week of November 17 sees Marine Money and a community of owners, financiers and industry professionals gathering in both Seoul, Korea and Miami, Florida, USA. In keeping with the recent global events large turnouts are set for both locations. Korea, in partnership with KDB, Korea Development Bank, will see more than 200 owners, shipyards and international financial professionals congregate to examine the best ways forward in a difficult market. While in Miami, with partner DVB Bank, a cross section of the Americas will gather to explore ways ahead.
Soc. Gen and KDB Get Mandate for Hanjin’s $200M Facility for Newbuildings
Deal of the Year – 2002 Bank Debt
Determining the bank debt deal of the year is usually the most challenging of all the awards we give. Of the hundreds of revolvers, term loans and refinancing totaling about $40bn done for the shipping industry each year, it is generally very difficult to determine a winner – but this year it was easy.
This year’s Bank Debt Deal of Year award goes to Citigroup, the Korea Development Bank and the Korea Exchange Bank for the $1.05bn facility that they arranged to finance Wallenius Wilhelmsen’s (WW) acquisition of Hyundai Merchant Marine (HMM)’s car carrier business, including the term charters with Hyundai Motors and Kia Motors (HMC/KMC). The NewCo, known as “Korea Ro-Ro”, is to be jointly owned by Wallenius 40%, Wilhelmsen 40% and HMC/KMC 20%.
There were several things we liked about this deal. Perhaps more impressive that its sheer size was the fact that it attracted more funding from foreign lenders than any previous Korean leveraged deal. This Norwegian/Korean transaction was also extremely complex, requiring securitization of cash flow streams into three tranches with multiple security packages and pricing.
The Official Guide To Marine Finance Providers
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