New Sources of Capital 18th Annual Ship Finance Forum

Transcription

1 New Sources of Capital 18th Annual Ship Finance Forum November 17

2 Access to funding needed for a global fleet that is growing Development in market value of total world fleet USDbn 1,0 1,100 1, Q' 17 Global fleet value has been growing steadily from USD ~700bn in 06 to USD 92bn YTD 17 Source: IHS, Clarksons Shipping Intelligence Network 2

3 Syndicated finance loans have left the shipping sector hanging Syndicated marine finance loans (# of issues) Following a wave of debt refinancing in the drybulk sector and challenging outlook environment in the tankers and gas sector, shipowners have been warned that access to bank financing will be tight in the coming years Syndicate marine finance loans have fallen from 66 issues (USD 42bn) in Q1 15 down to 25 issues (USD 4bn) in Q is on track to be even lower than in 09 As a result, shipowners have started to seek alternative sources of financing to fund the gap, such as: Nordic bonds US private placements Sale leasebacks # of loans Q1'07 Q1'08 Q1'09 Q1'10 Q1'11 Q1'12 Q1'1 Q1'14 Q1'15 Q1'16 Q1'17 Nonoffshore marine finance loans (issue volume) USDbn Actual Annualized % decline in two years 51% decline 76% decline Source: Dealogic

4 Equity financing available but no euphoria Equity issues (0417 YTD) Ship values have become more transparent # transactions IPO PP Followup VesselsValue has increased in popularity the recent years, and has become a benchmark for generic vessel valuation across asset classes. Investors commonly utilize VesselsValue as starting point when evaluating investment opportunities 40 Pareto Shipping Weekly provides subscribers with an update on latest news in the shipping sector, upcoming equity research focus, supply side characteristics, generic broker quotes across sectors, scrapping and S&P activity Shipbrokers For detailed analysis on investment opportunities, investors increasingly turn to shipbrokers and industry experts for quotes on specific assets and estimates on dayrates Equity issues has been a popular tool to recapitalize existing balance sheets Limited appetite for growth No new shipping listings in both 16 and 17 Curiously successful deals have not fueled further appetite for exposure Investors have a lot of tools to evaluate investment opportunities, and are price sensitive and liquidity biased So with traditional funding sources less active, who is picking up the slack? Source: Marine Money Deal Database 4

5 Nordic bond market has seen increased activity Nordic bonds (# of issues) As banks have been restrictive on lending, shipowners have turned to the Nordic bond market to gain access to capital as well as seeking alternative structures to lower the debt service payments In 17, we have seen new bond issues within the shipping sector on Nordic documentation, and a record high volume of USD 2.2bn Historically, most of the shipping bonds in the Nordic market have been unsecured issues. However, recently more secured issues have come to the market and attracted high interest among investors # transactions Nordic bonds within shipping (issue volume) USDbn Shipping Offshore services Drilling All time high issue volume for shipping bonds 26 A number of Nordic bond transactions have lower amortization structure and lighter covenants than traditional bank debt, yielding lower debt service payments despite higher interest Source: Pareto Securities 5

6 The Nordic bond markets has been receptive to new issuers Number of new issuers of Nordic high yield bonds # of issuers New issuers 5y average number of new issuers New issuers in 17 Source: Nordic Trustee 6

7 Shipowners have yet to capitalize on the market potential Shipping market share of total Norwegian HY volume 92% 92% 100% 8% 90% 9% 84% 96% 92% 82% 9% 76% 8% 8% 24% 17% 16% 18% 10% 7% 4% 8% 7% Shipping Other Improved market share for shipping issues in 1517 YTD. However, still significant market potential for new issuers within the shipping sector USD 2.2 billion still only 12% of syndicated bank loan market bonds accounted for almost 90% of debt in UDW market at peak Source: Nordic Trustee, Pareto Securities 7

8 Today s main topics I. Access to funding needed for a growing global fleet II. Reduced availability of traditional funding sources III. Issuers are seeking new sources of capital to refinance existing debt IV. The Nordic bond market has seen a record number of shipping issues 8