ECAs’ New Roles in Ship Finance and Kexim’s Plan in Busan · Marine Finance Center . New...
Transcript of ECAs’ New Roles in Ship Finance and Kexim’s Plan in Busan · Marine Finance Center . New...
ECAs’ New Roles in Ship Finance and Kexim’s Plan in Busan
ECAs’ Ship Finance in General
Capturing Opportunities in Equity Investment
Table of Contents
Activity in the Project Bond Market
Kexim’s Plan in Busan with Marine Finance Center
ECAs’ Ship Finance in General
4
Where are the top ship yards?
26.4 28.8
32.4 35.8
31.4
24.7 22.1
0
10
20
30
40
50
2008 2009 2010 2011 2012 2013 2014
China Korea Japan Europe
Deliveries by Country/Region(Million GT)
Rank Company No m.CGT
1 Daewoo 127 8.1
2 Samsung HI 93 5.5
3 Hyundai HI 94 4.7
4 Hyundai Samho HI 85 3.7
5 Hyundai Mipo 139 3.1
6 Hudong Zhonghua 53 2.5
7 Shanghai Waigaoqiao 66 2.2
8 Jiangsu New YJZ 90 2.0
9 Sungdong SB 76 2.0
10 HHIC-Phil. Inc. 39 1.8
Orderbook by Shipyard in May 2015
* Source : Clarksons
ECAs’ Ship Finance in General
5
Possessing Expertise in Ship Finance
Establishment 1976
Governing Authority Ministry of Strategy and Finance
Product Loan and Guarantees
Equity U$8.7bn
Ownership 100% Government-owned
Rating(‘14.9) Moody’s : Aa3(Stable)
S&P : A+(Positive) Fitch : AA-(Stable)
ECAs’ Ship Finance in General
Source: KEXIM, GIEK, JBIC, CEXIM Annual Report
0 1 2 3 4
CEXIM
JBIC
GIEK
KEXIM
2011
Bn($)
6
11%
89%
2011
Offshore Ship
44% 56%
2014
Offshore Ship
Kexim as a Leading ECA in Ship Finance
Trend in Loan/Guarantee Commitment
Bn($)
6
Ship vs. Offshore
24.0 19.8 19.7 19.3 18.3 18.0 17.0 15.5 15.1 15.0 14.4 12.8 12.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0Bn($)
2013 Shipping Portfolio League Table
*Source: KEXIM, Marine Money
ECAs’ Ship Finance in General
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2011 2012 2013 2014
Loan Guarantee
7
Ship Owner
KEXIM
Charterer Korean Shipyard
Escrow A/C
Borrower
Charter Fee
Equity
Loans/ Guarantee
Direct Loan Financial Guarantee
Repayment
Ship Building Contract
Commercial Bank
Time Charter
Loan Agreement
ECA’s Project Finance
Derivatives / Leasing
Fixed↔Floating Rate Swap •Leasing Scheme
Equity New
Eco-Ship Fund Global Maritime Co-investment Framework
Bond New
ECA Covered Bond
…in the Future
Traditionally…
- OECD guidelines (12yr, full payout) - Competitive pricing - 100% guarantee
ECAs’ Ship Finance in General
Activity in the Project Bond Market
9
Trend : Sources are diversifying…
0
20
40
60
80
100
120
140
2007 2008 2009 2010 2011 2012 2013
Private equity Bank debt
Equity capital markets Bonds capital markets
Bn($)
Where has the funding come from?
1,625
10,795
2,902
3,151
7,025
2,425
17,940
9,636
5,035
- 5,000 10,000 15,000 20,000 25,000 30,000
Equity capital markets Debt capital markets Bank loans
Capital raising in the Asian maritime industry (2013)
(Us $m)
US
Europe
Asia
* Source : Marine Money
ECAs’ Ship Finance in General
10
Ichthys LNG CPF, FPSO
4,590mil
Deal size is growing…
Vessel Type Contract Price (1 vessel, million)
Deal Size* (million)
Bulker ~ 50
300 ~ 800 Container ~ 150
Tanker ~ 100
LNGC ~ 200
400 ~ …??? Drillship 500 ~ 800
FPSO/FLNG… 600 ~ 2,000
15.1
3.1
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Contract price (by project) KEXIM's commitment (by project)
…filling the Funding Gap
A.P. Moller 18 Containers
3,663mil
Seadrill 3 Drillships
1,573mil
Ocean Rig 3 Drillships
1,864mil
BGT 6 LNGCs 1,337mil
Golar LNG 2 FSRUs, 6 LNGCs
1,730mil
($100m)
*Source: KEXIM’s previous deals
ECAs’ Ship Finance in General
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Bond Guarantee
Loan Guarantee
* Source : JP Morgan
Strength of ECA-Guaranteed Bond
① Diversifies funding sources to the capital market ② Direct access to broader investor bases
③ Stable and long term financing/investment
④ Currently attractive pricing environment
⑤ Absorbs otherwise inaccessible liquidity
Banks
Buyer
ECA Guarantee
Repayment Loan
Bank Loan Market
Buyer
ECA Guarantee
Repayment Bond proceeds
Capital Market
Transition from Loan to Bond
Activity in the Project Bond Market
965m (14)
2.6bn (19) 291m
(2)
6.5bn (37)
US-EXIM Launching
ECGD Launching
COFACE, KEXIM
Launching
79m (2)
‘13 ’12 ’11 ’10 ’01~’09 ’00
(in $)
General
Bond Guarantee
Growth of ECA-Guaranteed Bonds
Investor
9.3bn (43)
12
Typical Structure
KEXIM Financial Guarantee
KEXIM Bond Guarantee
Beneficiary Commercial Banks Bond Investors
Tenor Up to 12 years
Premium Upfront
Repayment Amortization
Security Mortgage, Account Pledge, Earnings
Assignment, etc.
Charterer Buyer (Issuer)
Note Trustee
Investor
KEXIM
Builder
Bond Proceeds Contract Payment
Contract
Hire P+I
P+I
Guarantee
Bond Proceed
Activity in the Project Bond Market
13
Investors
Case Studies
Scorpio Tankers
KEXIM
Direct Loans
Repayments
Loans Repayments
($125M) ($175M) ($130M)
$430M
Scorpio Tankers Project
Option to convert
Direct Loan + Covered Bond
Navig8 CTI Project
Direct Loan + Guarantee + Covered Bond
Bond Proceeds ($125M)
Investors Navig8
Direct Loans
Repayments
Loans Repayment
(U$1억) ($135M) ($125M)
U$385M
Guarantee
($125M)
Bond Proceeds ($125M)
KEXIM Commer-cial Banks
KEXIM Commer -cial Banks
KEXIM
Option to convert
Activity in the Project Bond Market
Capturing Opportunities
in Equity Investment
15
FIs Emerge as a Game Changer
Capturing Opportunities in Equity Investment
Financial Capital Pool
Pension Fund, PEF, Commercial Bank Insurance Company, IB, Private Investor
Shipping Fund
Funds purchase (or finance) ships and charter out the ships to shipping companies. e.g. KEXIM Ecoship Fund, KG Fund, KS Fund
MLP
Shipping companies set up MLPs and invite LPs. Shipping companies play crucial roles as GPs
e.g. Teekay, Seadrill, Golar
Leasing Company
Established by financial institutions (usually commercial banks) Purchase and charter out ships to shipping companies. e.g. Minsheng Leasing
16
Kexim’s “Eco-ship Fund”
Program “ECO-SHIP FUND”
Program Size KRW 1 Trillion (USD 1 Billion) Investment
Period 3 year
KEXIM Investment
KRW 250 Billion (25%) Investment
Format Multi Closing, Capital Call
Program Co-Investors
Pension Funds, Insurance Companies, Commercial Banks, Investment Banks
Investment Target
Junior debt or equity investment for shipping companies buying Korean “eco-ships” * currently targeting Korean shipping companies
Currency & Interest Swap
KRW/USD swap
Capturing Opportunities in Equity Investment
17
“Eco-ship Fund” Structure
SIC (SPC)
Fund 1
SIC (SPC)
Fund 2
SIC (SPC)
Fund 3
SIC (SPC)
Fund 4 Program Manager
Manage Project Funds Funds for
Each Project (KRW/USD)
Investment
*After review and due-diligence
① Proposal made to KEXIM first
② Proposal made to other
participants after KEXIM approval
(Portion : 25%)
Institutional Investors
(Participants: 75%)
KEXIM ECO-SHIP FUND PROGRAM
Shipping Company
Shipping Company
Shipping Company
Shipping Company
• Participation subject to own discretion.
• KEXIM anchors transactions, making approvals first.
①
②
Project Manager
Capturing Opportunities in Equity Investment
18 *Source : Financial Focus
Equity Bond Alternative Investment
y y
The Born of ‘Co-investment Framework’
Trend in Investment Apetite - Asset Allocation of 28 Global Pensions & Funds
Capturing Opportunities in Equity Investment
19
Eco-ship Fund Value-up Fund
KAMCO’s Tonnage
Equity Investment
Debt Financing (Loan, Guarantee)
Traditional Maritime Industry
Modern Maritime Industry
Conventional Vessel
Offshore
Infrastructure (Port, Power Plant, etc.)
“Global Maritime Co-investment Framework”
Global Infrastructure
Fund
Marine Resource
ECAs’ direct loans and guarantees
The Born of ‘Co-investment Framework’ – Investment Angle
Capturing Opportunities in Equity Investment
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SPV
Project Fund1
SPV
Project Fund2
SPV
Project Fund3
SPV
Project Fund4
cofund
Offshore
Plant
Maritime
Infrastructure
Deal Sourcing , Advisory
Pension
Funds, IBs
Maritime
Logistics
Business
Acquisition
KEXIM, Global Financial Agents
“Global Maritime Co-Investment Framework”
Co-Investment Framework
Capturing Opportunities in Equity Investment
“Broad Investor Base”
“Broad Scope”
21
Transaction Overview
Asset 3 Ultra-Large Containerships
Lessor a SPV owned by FIs
Lessee One of European Shipping Companies
Deployment One of Major Shipping Alliances
Ticket Size (Equity) USD 120M
Leverage Size (Debt) USD 360M
Redemption TBD
Yield < Debt : Equity ratio = 75% : 25% >
- Equity Investment : [Target 10.0% / p.a]
- Senior Investment : [Target L+ 2.0% / p.a]
Ongoing Considerations
① Purchase Option Strike Price ② Periodic Rental Level ③ Minimal Residual Value Risk
Co-investment SPV
Shipping Company
Alliance
Investors
① Invest and Own
③ Lease & Purchase Option
② Financing Support
⑤ Deploy
Financial Advisor
⑥ Manage
④ Rental
Ship Manager
⑥ Ship Management
Financiers
Pilot Project - Leasing Solution for Ultra-Large Containerships
Capturing Opportunities in Equity Investment
Kexim’s Plan in Busan
with Marine Finance Center
23
Busan as World’s Transportation and Finance Hub
Establishment of Marine Finance Center
(‘14. 9. 29)
20th ~22nd Floor Busan International Finance Center Munhyeon-dong, Nam-gu, Busan
Busan
Half of Korean major shipyards &
82% of shipbuilding equipment
companies are concentrated in
Busan & Gyeongnam Province
Busan Harbor is 5th largest
in world’s cargo volume.
* Shipyards
Increasing demand for financial support to struggling Korean shipbuilding / shipping industries
Designation of Busan as Marine Finance & Financial Derivatives Hub
Government Initiative : ‘Reshaping the Roles of Policy Banks’ (2013)
Locational Factors
Structural Factors
Kexim’s Plan in Busan with Marine Finance Center
24
Keep MFC’s interests aligned with Busan’s Marine Policies Provide foreign currency liquidity, finance experiences and co-financing opportunities to local FIs
Shipbuilding Shipping Equipment Harbor, Logistics Service
Implement marine policies
Marine Finance Center
New Financing Needs
New Financing Needs
Share marine finance
experience
Assist fund raising of
local banks
Local/International FIs
Kexim’s Support to Promote Busan as a Financial Hub
Kexim’s Plan in Busan with Marine Finance Center
25
Strategies to Create Synergy
Kexim’s Plan in Busan with Marine Finance Center
CERs Exchange
Marine Exchange
Comm Exchange
Shipping Fund
Associate Backup Center
Integrated IT System
Credit-Rating Inst.
Settlement Inst.
Deriv. R&D Center Deriv. Association
Marine Finance Forum
Training Inst.
Graduate School
Fund Manage Inst.
Guarantee Agency
Legal, Accounting
Financing Meeting
Int’l PEFs
Hedge Funds
Global IBs
Specialization Network Internationalization
Infra- structure
Human Resource
Attrac- tion
Kexim’s Plan in Busan with Marine Finance Center
North Pole Route
Europe, Africa America
Busan
Thank you