Shipping, Offshore and Logistics (SOL) November 21, 2008

Transcription

1 Shipping, Offshore and Logistics (SOL) November 21,

2 Shipping, Offshore and Logistics (SOL) November 21, 2008 The SOL Strategy and the overall portfolio The dry bulk market and portfolio The tanker market and portfolio The container market and portfolio The offshore segment Handling the downturn 2

3 Strategy The SOL strategy is to focus on the top companies in each segment. 1. Be the preferred provider of services to high credit quality shipping, offshore and logistics customers. 2. Have strong customer focus and long term relationship orientation. 3. Increase the fee based income 4. Maintain good credit quality 3

4 Strategy A corporate strategy and a corporate risk analysis. Our credit analysis is based on an in depth evaluation of the corporates we finance, including their total balance sheet, fleet and standing in the market. Management strength and independence is also given considerable weight in our internal risk model. We typically syndicate larger transactions to other shipping banks. We typically establish financial covenants, which we follow closely. A large majority of our facilities are secured by 1st priority mortgages. We finance very few Norwegian K/S-es, and never single purpose companies without long and secure time charter employment. Compared to other shipping banks, we are with our corporate focus, probably less "steel oriented" and less project finance oriented. Due to the present financial turbulence, pricing has increased considerably, covenants have been strengthened and tenors shortened. 4

5 The SOL portfolio The Shipping, Offshore & Logistics portfolio Aviation 0,4 % Cruise 4,7 % Logistikk 7,2 % Other non SHD 1,8 % Tanker 8,3 % Container 10,2 % Offshore 28,2 % Dry Cargo 15,9 % Product 4,9 % Other SHD 1,9 % Gas 8,3 % RoRo / PCC 3,1 % Shuttel 1,5 % Chemical 3,4 % 5

6 The SOL portfolio SOL: Development in EaD pr. segment Shipping, offshore and logistics, EAD in NOK Endring siste 3 Endring siste 12 Tankers D ry bulk Ro Ro C ontainer Produkt tankers C hemical Shuttle tankers Gas Other shipping Total shipping Offshore Aviation Other non-shipping Logistics C ruise Total SOL

7 milliarder kroner The SOL portfolio Distribution of exposure pr. Grade 80 Klassefordeling SOL ,1 6,3 14,5 24,5 9,3 4,0 3,0 0,8 0,2 0, ,2 10,7 21,4 21,0 13,7 3,3 1,7 0,1 0,1 0, ,7 20,3 34,9 30,6 19,2 9,4 1,6 0,0 0, ,9 23,4 49,0 36,5 25,1 10,1 0, ,2 25,4 62,4 56,1 20,5 6,9 0, ,3 24,9 63,1 59,4 22,1 7,9 0, ,2 23,8 64,3 57,1 26,7 7,7 0, ,9 26,4 74,8 56,0 33,9 7,7 0,6 7

8 Low loan losses 0.29% in average over the last 19 years The SOL portfolio 2,00 International shipping Loss in % of drawn loans and guarantees 1,50 8 1,00 0,50 0,00-0,

9 The SOL portfolio Some facts about the Dry bulk, Tanker and Container portfolios Dry Bulk T ank Container Total portfolio, EaD, NOK bill Average grade Clients in Grade EL 0.14% 0.18% 0.18% 10 largest clients in % of total segment 52% 52% 77% 20 largest clients in % of total segment 72% 79% 90% 9

10 The DnB NOR Markets weekly report, week 47. The Dry Bulk segment. The Dry Bulk segment 10

11 Billion NOK NOK bill. The Dry bulk portfolio, 10 largest clients and Grade distribution. The dry bulk segment 4,5 4 3,5 3 2,5 2 1,5 1 0, largest Dry bulk clients measured in EaD Grade distribution dry vs total

12 The dry bulk segment The Baltic Dry Index the BDI. The BDI indicates the spot rate levels for the dry bulk vessels and is created by the Baltic Exchange in London. The BDI is a composite of three sub-indexes that measure different sizes of dry bulk carriers. Multiple geographic routes are evaluated for each index to give depth to the index's composite measurement. Changes in the BDI can give investors insight into global supply and demand trends and is often considered a leading indicator of future economic growth. The DnB NOR clients are typically employing their vessels on long term charters and are therefore not immediately fully exposed to the recent drop in BDI. Long term, it will of course have an effect, but even today it is possible to fix vessels for say 1 year at higher rates than indicated by the BDI. 12

13 The dry bulk segment Some facts about the 20 largest Dry Bulk clients The clients are mainly large, industrial shipowners. They constitute 72% of the Dry Bulk segment The average exposure, EaD, is appr. USD 170 mill.. The average liquidity is appr. USD 100 mill The average TC coverage is approximately 50% for 2009 The average TC coverage is approximately 40% for 2010 The average age of the fleet is approximately 8 years Based on September 2008 ship values, one client has a loan to value ratio in excess of 70%, but has a long term time charter coverage of 100%. 13

14 The DnB NOR Markets weekly report, week 47. The Tanker segment. The tanker segment USD/ Day VLCC Average Earnings Modern,000,000,000,000 0, Q 2Q 3Q 4Q 5y Spread y Average Future Rate Source: DnB NOR Markets 14

15 NOK bill. Billion NOK The Tanker portfolio, 10 largest clients and Grade distribution. The tanker segment 1,8 1,6 1,4 1,2 1 0,8 0,6 0,4 0, largest Tanker clients, measured in EaD Grade distribution tank vs total

16 The DnB NOR Markets weekly report, week 47. The Container segment. The container segment 16

17 NOK bill. Billion NOK The Container portfolio, 10 largest clients and Grade distribution. The container segment 4 3,5 3 2,5 2 1,5 1 0, largest Container clients, measured in EaD Grade distribution container vs total

18 NOK billion The offshore portfolio 10 largest clients and segment split The offshore segment 22 % 33 % 5,00 4,50 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0,00 31 % Rigs Supply/Tugs/Seism etc. 14 % FPSO/FSO Other The 10 largest clients represent half of the Offshore portfolio. 18

19 Handling the downturn Handling the downturn Monitoring of our portfolio is given top priority as the current financial turbulence coupled with the downturn in many of the shipping markets are not expected to improve anytime soon. We have reviewed all our container, tank, and dry bulk clients. We are continuously evaluating which client to be put on the Watch list, and what actions to be taken. 19

20 Our internal 10 commandments Handling the downturn 1. In general, we are increasing our market intelligence about the various shipping segments and the bank market. In troubled times, rumors are abundant. We are checking them out, and we don t always believe them. 2. We keep in very close dialogue with the clients to see how proactive they are in today s situation. 3. We are updating cash flows etc. to ensure that we are on top of the situation. We are running various stress test scenarios, and analyzing upcoming financing needs. 4. We are checking the values of our securities. 5. We are checking our rights in the loan agreements. What can we do, and how quickly can we act. 6. Covenants are there to be used. We are using them, but we also use common sense. 7. We are in close dialogue with the bank syndicates. 8. We are continuously considering which clients to put on the Watch List. 9. We are involving expertise internally and externally. 10. We remain a long term player, but we take into consideration how the management acts, the balance sheet, fleet, and standing in the market. 20