brs shipbrokers project & corporate finance advisory · bnp paribas 12.0 17.6 cexim - 17.5 kfw...
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BRS ShipbrokersProject & Corporate Finance Advisory
Shipping finance market update
ConfidentialProject & Corporate Finance [email protected]
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2
225Shipbrokers
20Locations
CORPORATE PRESENTATION – THE OFFICES
Chairman : Tim JONES
CEO : François CADIOU
BRS GROUP
A few BRS figures:
• 225 shipbrokers, all multilingual and educated to a high level
• 1,000 newbuilding transactions in 20 years including 450 in China
BRS, each year, this is:
• 100 assets transactions
• 3,500 bulk chartering transactions
• 2,000 tanker chartering transactions
• Dry bulk CoAs of 220 million tons
• Dry bulk CoA Period business equal to 410 years
Regular recognition from the industry’s leading news outlets and specialized publications as a growing and innovative
shipping player
530Employees
AthensBeijingBogotaDubaiGenevaHamburgHo Chi Minh
Hong KongHoustonJakartaLondonLuxembourgMadridMumbai
ParisRio de JaneiroShanghaiSingaporeStamford
3BRS GROUP
FACT 1
« Many shipping banks left the market, the ones remaining are lending less »
4BRS GROUP
Commercial lendersEvolution of total Ship Finance debt outstanding
352
463
436450 455
422
401391
398
355345 340
320
200
250
300
350
400
450
500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total shipping bank debt (excluding lessors)
30% decrease in shipping loans, on same period: bulk carriers fleet capacity increased +100%, containers +60% and tankers +30%This compares to a world fleet valuated in the range of USD 1000bn
-30%
USD bn
Source: BRS brokers, Marine Money
5BRS GROUP
58
.0
44
.8
36
.0
30
.0
20
.7
19
.5
18
.7
14
.6
13
.0
12
.2
12
.0
11
.3
11
.3
11
.2
10
.0
9.6
9.5
8.2
6.5
5.1
5.0
3.5
2.7
2.2
2.0
1.8
1.8
HSH
No
rdb
ank
De
uts
che
Sch
iffs
ban
k
Dn
B N
OR
RB
S
KfW
No
rdea
Cal
yon
DV
B
BTM
U
Llo
yds
/ H
BO
S
BN
P P
arib
as
Deu
tsch
e B
ank
Dan
ish
Sh
ip F
inan
ce
HV
B
Bre
me
r La
nd
esb
ank
SMB
C
Cit
i
Dan
ske
Ban
k
SEB
Fort
is
Nat
ixis
He
lab
a
Alp
ha
Ban
k
ICB
C
Pir
aeu
s
Ban
k o
f Ir
ela
nd
JP M
org
an
17
.6
17
.5
16
.4
14
.1
13
.5
12
.2
12
.2
12
.2
12
.1
12
.0
11
.8
10
.8
10
.8
9.8
9
.2
8.7
7
.5
6.7
6
.4
6.1
6
.0
6.0
5
.9
5.5
5
.2
5.0
4
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3.2
3
.2
3.1
3
.0
2.9
2
.8
2.4
2
.3
2.3
1
.8
1.7
1
.6
1.1
0
.6
0.3
BN
P P
arib
as
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IPEX
-Ban
k
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ank
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dit
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ico
le C
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a
AB
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K-S
ure
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eas
ing
No
rd L
B
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i
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C
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Co
mm
Le
asin
g
KEX
IM SEB
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ish
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ip F
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ske
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k
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err
il Ly
nch
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en C
IB
HC
OB
Min
shen
g Le
asin
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CM
B L
eas
ing
CO
SCO
Lea
sin
g
Stan
dar
d C
har
tere
d
Ship
Fin
ance
ICB
C L
eas
ing
CSS
C L
easi
ng
CD
B L
eas
ing
AV
IC L
eas
ing
HV
B U
nic
red
it
Co
mm
. Ban
k A
ust
ralia
Swe
db
ank
CIC
Alp
ha
Ban
k
Euro
ban
k Er
gasi
as
CC
B L
eas
ing
Ch
ina
Hu
aro
ng
Leas
ing
KA
MC
O
Co
mm
erzb
ank
Am
ste
rdam
Tra
de
Ban
k
Top 5 in 2008Exposure in
2008Exposure in
2018
HSH Nordbank 58.0 6.0
DSB / Commerz 44.8 0.6
DnB NOR 36.0 12.2
RBS 30.0 -
KfW 20.7 16.4
Top 5 in 2018Exposure in
2008 Exposure in
2018
BNP Paribas 12.0 17.6
CEXIM - 17.5
KfW IPEX-Bank 20.7 16.4
SuMi Trust Bank - 14.1
Credit Agricole 18.7 13.5
Shipping banks in 12/2008
Shipping banks in 12/2018
Shipping debt: USD 460bn
Shipping debt: USD 340bn
Source: BRS brokers, Marine Money
6BRS GROUP
Commercial lendersChange in landscape: 10 years – movers in and movers out
(60.0)
(50.0)
(40.0)
(30.0)
(20.0)
(10.0)
-
10.0
20.0
30.0
CEX
IM
SuM
i Tru
st B
ank
AB
N A
mro
K-S
ure
ICB
C L
eas
ing
No
rd L
B
Bo
Co
mm
Le
asin
g
KEX
IM
Bo
fA M
erri
l Lyn
ch
SocG
en C
IB
Min
shen
g Le
asin
g
BN
P P
arib
as
CM
B L
eas
ing
CO
SCO
Le
asin
g
Stan
dar
d C
har
tere
d
Ship
Fin
ance
CSS
C L
eas
ing
CD
B L
eas
ing
AV
IC L
eas
ing
Co
mm
. Ban
k A
ust
ralia
Swed
ban
k
CIC
Euro
ban
k Er
gasi
as
CC
B L
eas
ing
Ch
ina
Hu
aro
ng
Leas
ing
Cit
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KA
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SEB
Am
ster
dam
Tra
de
Ban
k
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C
Alp
ha
Ban
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Dan
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Ban
k
Ban
k o
f Ir
elan
d
JP M
org
an
Pir
aeu
s
ICB
C
Hel
aba
DV
B
KfW
Dan
ish
Sh
ip F
inan
ce
Dan
ish
Sh
ip F
inan
ce
Nat
ixis
Fort
is
Cre
dit
Agr
ico
le C
IB
No
rdea
HV
B /
Un
icre
dit
Bre
me
r La
nd
esb
ank
Deu
tsch
e B
ank
Llo
yds
/ H
BO
S
BTM
U
DN
B /
Dn
B N
OR
RB
S
DSB
/ C
om
mer
z
HSH
/ H
CO
B
USD +166bn
USD -258bn
New comers / increasers
Slow steamers / exiters
Source: BRS brokers, Marine Money
7BRS GROUP
Commercial lendersKey drivers behind this shake up: what happened ?
2008/2010 crisis killed shipping business for the leading banks (USD crisis, shipping crisis, offshore crisis)
New regulations have made shipping less attractive to banks
Banks that remained in the market now have to deal with:
More stringent regulations (Basel 3) affecting :
The cost of capital and therefore the need for side business and
The proposed structures : leverage, profile, duration
Compliance, environmental considerations
Market has developed by itself alternative ways of getting finance
What happened ?
8BRS GROUP
FACT 2
« Lenders are focusing on large companies »
9BRS GROUP
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
1-5 ships 6-10 ships 11-20 ships 21-50 ships 51-100 ships > 100 ships
Impacts of the change in financing landscape
Allocation of NEW shipping loans by company size
Commercial lenders
“Large” shipping
companies have absorbed
78% of the shipping loans
made since 2007
USD bn
Source: BRS brokers, Dealogic
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
-h1
10BRS GROUP
LENDING – Margin evolution (bps pa)
Shipping Finance market updateEvolution of debt average margin
11/2019
Sharp decrease in margins, reaching the historical low point of 2007 pre-crisis.
Disclaimer : this is market information, based on publicly or commercially available data.
Source: BRS brokers, Dealogic
11BRS GROUP
FACT 3
« Chinese Leasing has been a massive source of capital into shipping finance »
12BRS GROUP
Shipping Finance market updateChinese Leasing
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Chinese Leasing developed very quickly into shipping
USD bn
Source: BRS brokers
200
250
300
350
400
450
500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
13BRS GROUP
But Chinese Leasing does not completely offset the lenders pulling out of shipping (and, most of the time, lenders and lessors serve the same high profile companies)
Shipping Finance market updateChinese Leasing
USD bn
Source: BRS brokers, Marine Money
14BRS GROUP
FACT 4
« Access to Capital Markets are narrowed a lot for shipping companies»
15BRS GROUP
Equity Capital Market Oslo bonds
4
2.7 2.8
3.2
21.8
8
6
2.52.7
4
2.5
0.5
0
1
2
3
4
5
6
7
8
9
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
0.8
1.5
0.7
0.5
2.1
1.1
0.2
0
0.5
1
1.5
2
2.5
2013 2014 2015 2016 2017 2018 2019
Shipping Finance market updateCapital Markets
USD bn USD bn
Source: BRS brokers, Pareto Securities
16BRS GROUP
FACT 5
« Alternative lenders are opportunistically entering the market to fill the gap»
17BRS GROUP
Alternative lenders entering the market
Many announcements
Shipping Finance market updateAlternative lending
BUT
• Limited amount of liquidity available.
• Cost of finance is expensive, some claim that debt is more expensive that what can be expected on equity is an industry that tends to deliver 6-9% return in average.
• Some of those banks are involving shipowners as “advisors” or “shareholders”. This could bring some resistance to (i) share information with a competitor and (ii) get financed by an institution that is geared to repossess to operate.
• Very asset driven, does not give a lot of credit to the corporate set-up.
18BRS GROUP
FACT 6
« Shipping finance for tomorrow is a question mark»
19BRS GROUP
Shipping Finance: projected needs
Run off of portfolio : refinancing needs Orderbook
Total orderbook for pure shipping is USD 183bn
Assuming a 60% average leverage and a equal
ship deliveries distribution over 4 years this
would require c. USD 30bn new debt per year
into shipping.
Total shipping debt in place is USD 320bn, we
could assume a natural amortization of this
portfolio of 15% per year.
Giving effect of the ship ageing / depreciation we
could infer a 5% refinancing requirement to
maintain same leverage over portfolio
0
10
20
30
40
50
60
70
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Histircal lending activity Projected debt needs
USD 45bn average yearly financing requirement over the next 4 years
USD bn
Source: BRS brokers, Marine Money
20BRS GROUP
0
10
20
30
40
50
60
70
80
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Historical Lending activity Chinese Leeasing Japanese Lease Bonds New loans Chinese Leeasing Japanese Lease Bonds Gap
USD 10bn average yearly funding gap over the next 4 years
Shipping Finance: projected funding gap
USD 10bn funding gap per year on the debt side for the next 4 years
Highly dependent upon Chinese Leasing for orderbook financingExport finance is a strong sponsor to finance newbuldings
USD bn
Source: BRS brokers, Marine Money
21BRS GROUP
FACT 7
«Access / Scarcity of Shipping finance is reshaping the industry on owners’ side»
22BRS GROUP
What’s next
Shipping Finance: looking ahead
Shipping finance is driving the change over the industry
Consolidation on the owners’ side in order to grow in size and access to liquidity
Increasing role of listed intermediate owners / financial owners that provide bareboat to the ship owners and receive loan from banks
Chinese Lessors tend to adopt strategy of acting as ship owners with first class charterers
The above pushes some owners to have less exposure to the asset play and act as service providers
Newbuilding activity has been (and will have to remain) supported by innovative solutions from “in-house leasing platforms” and ECAs
23BRS GROUP
Departments & [email protected]
Sale & [email protected]
Project & Corporate Finance [email protected]
Shipbroking & Rep. [email protected]
Hong [email protected]
Rio De [email protected]
Affiliates
www.brsbrokers.com
Corporate Presentation
24
Disclaimer
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