K-SURE makes your finance sure

Transcription

1 2018 Korea-Hellenic Maritime Cooperation Forum K-SURE makes your finance sure Re-thinking ECA Ship Finance now & beyond June 2018 Hong Ik Kim Head of Tanker & Offshore Team

2 Table of contents 1. ECA in global ship finance market 2. K-SURE story until now 3. New Objectives & Action Plan 4. Buyer Credit Program 5. Key Benefits of the Program 6. Market status & Projects under review

3 1 ECA in global ship finance market Traditional roles of ECA Safeguarding the link between shipping and shipbuilding industry Stabilizer to a cyclicality in the shipping and ship financing Augment commercial bank loan Newly-required roles of ECA Increased demand from financiers amid huge losses and stricter banking regulations Professional service and direct relationship with the clients, financiers Bringing local financial institutions to global ship finance space US billlion Global Shipping & Offshore loan volume With ECA involvement 2015 % ECA involvement 45.0 % 40.0 % 35.0 % 30.0 % 25.0 % 20.0 % 15.0 % 10.0 % 5.0 % 0.0 % Source : Dealogic, DNB

4 2 K-SURE story until now (1/3) Buyer credit commitment : U$14.1billion (411 vessels) Commitment by vessel type ⑤ Bulker & Others 6.4% ④ Offshore 11.7% ⑥ LPG 5.6% 6.0 US billlion 5.0 ①①Container Container U$5.3bil 37.8% ③ LNG 14.6% Annual New Business Volume Tanker ②②Tanker U$2.9bil U$2.9bil 20.4% '09 TARGET '10 '11 '12 '13 Export Bond 1.3 '14 '15 '16 17 '18.3 Buyer Credit Portfolio of strategic assets : type of vessels (# of units /exposure amount) Mega containers(55/u$3.4bil), LNGC(46/U$1.6bil), LNGBV(1/U$28mil), FSRU(4/U$502mil)

5 2 K-SURE story until now (2/3) What we have seen & done so far Recently Korean yard order dropped sharply in line with industry downturn. SME yard restructuring made K-SURE support shrink too 1~2 year time lag between shipbuilding contract and post-delivery financing demand With our new business target for 2018, K-SURE portion is expected above 6% of the estimated Korean yard order of U$28.7bil 60.0 Korean yard order US billlion 20.0% 45.7% % % 14.1% % K-SURE Portion 12.0% 10.5% 8.6% 10.0% % 6.8% % % 6.0% 4.6% % % 4.0% 2.0% 0.0%

6 2 K-SURE story until now (3/3) Key lessons learned More collaboration with lenders Active engagement with key clients Strengthening market analysis and loan monitoring What we have observed Market downturn coupled with reduced capacity of banks led to flight to quality Good names enjoy market liquidity Changing dynamics duly require both companies and financiers to be smarter & wiser Dimensions As-was As-is Deal Size Large Syndicate, co-financed with multiple ECAs Club Deal, co-financed with commercial banks only Deal Structure Standard & typical (corporate guarantee, long-term charter) Customized & deal-based (project finance, shorter or no charter) Client Quality Top tier, Big names Mid tier, lesser known players LTV / Loan Transfers Highly leveraged (80%) / Less Modest level (65~75%) / More frequent

7 3 New Objectives & Action Plan 1. Maximizing the benefits of our product Increase support for strategically important high-end, eco-friendly vessels Embrace the New Era of LNG Respond proactively to new financing needs 2. Enhancing customer experience Collaboration with Korean yards for marketing Provide indicative premium quotation at early stage More face time with leading market players Develop strategic relationships with partner banks

8 Table of contents 1. ECA in global ship finance market 2. K-SURE story until now 3. New Objectives & Action Plan 4. Buyer Credit Program 5. Key Benefits of the Program 6. Market status & Projects under review

9 4 Buyer Credit Program (1/2) Medium and Long Term(MLT) Export Insurance For foreign ship owners purchasing vessels from Korean ship yards Covers the ship owner s non-repayment risk triggered by political and/or commercial risks Insurance Structure Ships, Offshore vessels Payment Korean ship yard Borrower (Foreign ship owner) Loan BANK MLT Export Insurance Repayment

10 4 Buyer Credit Program (2/2) Eligibility Capital goods & services supplied by Korean companies. (=Tied to export) Risks covered Comprehensive (political and commercial risk) Percentage of cover Usually 95%. Case-by-case up to 100% Maximum amount covered Up to 85% of export contract value (Ship financing up to 80%) and, Premium, interest before delivery Tenor More than 2 years, up to 10 years in principle; up to 12 years(ship) and 14 years(pf) Premium Rates determined case-by-case. (Ship financing not subject to the OECD MPR) Other conditions (Principal) Equal and regular Instalments commencing 6 months from delivery (Interest) Payment Interval at least every 6 months

11 5 Key Benefits of the Program (1/2) For Ship Owners For Banks Diversification of Funding Source Risk Mitigation Competitive Pricing Portfolio Management Long-Term Financing New Customer Acquisitions Supportive of Restructuring & Waivers Customer Satisfaction Key considerations in underwriting (by the order of importance) 1. Credit profile of Borrower/Guarantor 2. Country Risk, Project structure, Project-specific risk 3. Drawdown/Repayment Period, Vessel Type (or strategic nature of the projects) etc.

12 5 Key Benefits of the Program (2/2) Well recognized, reliable source of long-term funding - Higher leveraged & longer-tenor finance compared to commercial loan (up to 80% of LTV with 12-year repayment period) - Well regarded and proved source of funding irrespective of market cycles - ECA-approved transactions are well received in the market with high recognition - Average covered margin for last 3 years [ Competitive Pricing - Average premium rate for last 3 years [ ] bps ] bps - With prepayment, premium refund available Market & Client-friendly Operation - Speedy, flexible execution (typically less than 3M from preliminary review to final approval) - Supportive of waivers, debt rescheduling and restructuring < Total number of consents approved during 2017 > Major covenant waivers & charter contracts amendment 39 Debt Rescheduling 23 Restructuring 11 (incl. ch.11)

13 6 Market status & Projects under review Vessel Type Container Tanker Offshore Market Status Currently under Review (# of Project) Confirmed Likely Tapping Recovery delayed due to overcapacity & decreased transportation demand. Consolidation is at work 1-1 Tanker : Downturn continuing due to supply overhang. NBs with scrubber are preferred in the market. Scrapping is set to increase in near future LNGC : Spot rate fast on rise. Trade volume is set to grow due to new project start-ups FSRU : Market expanding. Slower offshore terminal project progress (Semi-sub) 1 (FPU) 1 (Drill ship) - Slow E&P investment Overcapacity of floaters Steady pace of oil price increase coupled with revamped efficiency of field operations shows better sentiment for a slow recovery. S&P activities for stranded assets are often observed Estimated Position in cycle

14 7 Major clients by segment K-SURE provides ECA financing for major shipping industry leaders in the world. Container * Bulker Tanker Major Clients Offshore * Special Vessel LNG * LPG * FSRU

15 8 Basic flow of underwriting process K-SURE has simplified and quick internal process. - Typically less than 3 months from initial Term Sheet discussion to financial close Applying for LOI Insurance Consulting (Submit Term Sheet) Applying for M/LT Insurance Review T/S and issue Letter of Intent (LOI) Due-Diligence Payment Premium Issuance of Insurance Policy Approval Notice Insurance Responsibility Takes Effect Le In gal te re r fo nal view r a pr pp oc / ro ess va l by l a v pro ard p A Bo bers m Me

16 9 Organization Chart Maritime Finance Department Youngkuk(Martin) KIM / Department Head Container Team Tanker Offshore Team Jaesang LEW Hong Ik KIM Team Head Tel: jaesang.lew@ksure.or.kr Team Head Tel: khi0497@ksure.or.kr Hyunjae KIM Junhee CHO Samee CHOI Hansung KIM Deputy Director Tel: khj0583@ksure.or.kr Deputy Director Tel: junhee.cho@ksure.or.kr Deputy Director Tel: csm0502@ksure.or.kr Deputy Director Tel: hansungkim@ksure.or.kr Tanker LNG, LPG Carrier Offshore Unit FSRU, FPSO, FLNG Special Vessel Container Plan & Strategy Bulker

17 I believe that one of life's greatest risks is never daring to risk. - by Oprah Winfrey -