Future trends in shipping operations, finance and investment. 2 nd Annual Marine Money Cyprus Forum April 2018

Transcription

1 Future trends in shipping operations, finance and investment 2 nd Annual Marine Money Cyprus Forum April 2018

2 Access to funding needed for a global fleet that is growing Development in market value of total world fleet USDbn 1,200 1,100 1, Mar-18 Global fleet value has been growing steadily from USD ~700bn in 2006 to USD 941bn in Mar-2018 Source: IHS, Clarksons Shipping Intelligence Network 2

3 Syndicated finance loans have left the shipping sector hanging Syndicated marine finance loans 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 140 issues the first 3 quarters in 2016 down to 114 issues in 2017, while average issue size have remained relatively stable 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 USDbn Volume Loans # loans % decline % decline Source: Dealogic, Marine Money 3

4 And now the Libor is increasing too 3m LIBOR development 2.5 % 2.0 % Current: 2.36% 1.5 % 1.0 % 0.5 % Avg. 2013: 0.27% Avg. 2014: 0.23% Avg. 2015: 0.32% Avg. 2016: 0.74% Avg. 2017: 1.26% 0.0 % Interest/EBITDA for shipping companies (2018e) 70% 60% 50% 40% 30% 20% 10% 0% 59.7 % 42.3 % 40.1 % 25.8 % 58.2 % 46.2 % 54.2 % 49.7 % 50.1 % 35.5 % 42.0 % 30.4 % 23.7 % 40.1 % 35.9 % 29.8 % 24.6 % 21.8 % 13.4 % 10.9 % GLNG GLOG HLNG FLNG STNG ASC DHT INSW FRO EURN AVANCE LPG BWLPG GOGL SALT DSX SBULK SBLK DNORD BULK LNG Source: Pareto Securities Product tankers Crude tankers LPG Dry bulk = Sector average = Effect of an additional +100 bps increase in LIBOR, all else equal 4

5 However, non-bank capital is available Equity Markets remain selective, but quality investors are keeping an eye on the space Bonds Leases and bilateral lending Provides improved cash breakeven in a liquidity focused market Plenty of options from a broad range of sources (not just China) Crucial to know which avenues to explore Debt private placements An unmatched product for the right projects 5

6 Equity markets are selective and valuations challenging Not unlikely that there will be increased opportunities going forward Equity issues ( YTD) Valuation remains challenging # transactions IPO PP Follow-up P/NAV x High/Low x 1.18x Average x 0.8x 0.6x 1.03x 0.83x 0.70x 0.71x 0.94x 0.78x 0.89x 0.55x 0.81x 0.61x x Crude tanker Drybulk LNG Clean tanker LPG Equity issues have been a popular tool to recapitalize existing balance sheets Limited appetite for growth No new shipping IPOs in both 2016 and 2017 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 Sources: Marine Money Deal Database, Pareto Securities 6

7 Bonds offer an attractive alternative to bank And shipping companies are catching on as banks retreat Secured bond structures provide an attractive alternative to bank loans Improved cash breakeven is a key driver More shipping companies are turning to the bond market USDm Total fleet value Gross debt Gross LTV (%) % 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% USD/vessel/day 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 11,473 Opex Interest Amortisation 5,205 6,767-1,517 2,017 4,750 4,750 0 YR 0 Y 1 YR 2 YR 3 YR 4 YR 5 0% -1,000 Bank loan Bond PAS in-house broker quotes and straight line depreciation to scrap of 16 supramax vessels Margin: 3.50% 5.42% Profile: 5 years Bullet LTV: 50% 50% Source: Pareto Securities 7

8 Leases and bilateral lending Chinese leasing houses Other Asian options (Japanese, Korean) Western lease options Bilateral lenders Key success factors A lease is not S&P treat it as a financing exercise Different providers offer different advantages Any bilateral deals needs competition: a) reduce transaction risk and b) speed things up Recent examples November 2016 Sale Leaseback 3x 10,000 TEU vessels USD 250m Sole Arranger/Manager December 2017 ParTankers IX 2 x Suezmax vessels 5 yr bareboat to TEN USD 68m Sole Arranger/Manager December 2016 Sale Leaseback 4x VLCC 5 yr bareboat USD 204m Sole Arranger/Manager June 2016 Box Holdings Inc Equity JV in 6x 19,500 TEU container vessels USD 330m Sole Arranger/Manager CMA CGM sale and leaseback of 3x 10,000 TEU vessels Financed with Pareto s structured operating leasing scheme from a Chinese institution Tsakos sale and leaseback of 2x Suezmax vessels Financed with Pareto arranged sellers credit, mortgage loan and equity Euronav sale and leaseback of 4x VLCC vessels Financed with Pareto arranged sellers credit, bank debt and equity Quantum Pacific established equity JV with Ocean Yield for 6x 19,500 TEU containers on 15-year bareboat charters to a major European container liner Bank financing with international banks 8

9 Private placement financing Unmatched terms for the right deals What you need: Long term contract Strong counterpart What you get: High LTV > 15 year term Attractive spread Fixed coupon Segment LTV Term Coupon Selected clients Case study 1 Offshore >80% 15 years % Case study 2 Chemical tanker > 90% 17 years % Case study 3 Drilling ~100% 5 years % Case study 4 LNG > 130% 15 years % Total deal size > USD 1bn 9

10 Treat everything like a capital markets transaction The opportunity in today s market lies in taking advantage of the many attractive non-bank financing solutions Every company, project and asset has its ideal financing solution find out what it is Keep an open mind, explore solutions in parallel to find the ideal financing Run a structured and competitive process, regardless of what you pursue this will ensure: Better pricing Improved structure Faster process Reduced transaction risk 10

11 Thank you 11