Setting Sights on Overseas

Danish shipowner Torm has signed a ten year USD 167.3 million loan facility with a syndicate of banks led by Bank of China and Societe Generale. The funds will be used to cover 60% of the cost of six 53,000 dwt MR product tankers, each ordered at USD 46.5 million a piece from Guangzhou Shipyard International. Out of the USD 167.3 million facility, USD 83.7 million will be unsecured loans and the other USD 83.7 million in the form of buyer’s credit. This is also the very first time in a foreign syndicated loan that China Export & Credit Insurance Corporation (“Sinosure”) will underwrite the country risk in relation to the buyer’s credit. Torm will have to fork out the remaining 40% equity. Continue Reading

Sub Prime Potential

In Korea today the subprime crisis is all about the shipping industry. The historic close relationship between shipowners, yards and Korea’s largely government sponsored banks is raw in a way all sides wish it were not.

Owners looking for funds are finding banks constrained by liquidity and a rising cost of capital, while small and medium size yards suffer under a thin refund guarantee market and concerns that banks will not fund the next round of deliveries. Banks, on their part, bemoan their inability to step up for owners and worry that an influx of foreign banks such as SocGen, Garanti, DVB, and DnB will alter the future landscape by developing relationships with owners today. The reality, though, is that it is much more likely banks like KDB will create new solutions, providing both themselves the returns they seek and their clients the funding that they need. Meanwhile for the moment orders must be financed and Korea’s growing community of owners is looking for funds.
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