naftemporiki shipping forum nd january 2015 trends in ... · 1st naftemporiki shipping forum 22nd...

presented by

Ted Petropoulos HEAD

PETROFIN RESEARCH

1st Naftemporiki Shipping Forum

22nd January 2015

Trends in Global finance in the current market

Presentation outline

1. The global ship finance market

2. Current ship finance trends

PETROFIN RESEARCH www.petrofin.gr

• Global ship lending figures (drawn and committed) as of October 2014 are estimated at $475bn (Petrofin Research ©).

• The above includes the offshore support sector but excludes rigs and shipyard finance



• In Graph 1, we present the latest Petrofin Bank Research ©, on the shipping loan portfolio of the top 40 global ship finance banks representing $391.45bn of total loans (82.24% of the total, as opposed to 86% of 2013’s total).



Top 40 ship finance banks’ portfolios stands at US$391.45 as of November 2014:

Top 40 banks as of November 2013 - Top 40 ship finance banks’ portfolios stood at approximately at $401bn

Bank Lending to Shipping Ship finance based on interim data up to November 2014 – in $bn


* Market estimate ** Winding down portfolios

28.30 21.98

20.00 19.80

18.30 17.50

17.00 16.00

15.50 15.00

14.22 14.00

13.80 12.80 12.80

10.00 10.00 10.00

8.46 8.30 8.23 8.14

7.50 6.59

6.20 5.50

5.00 5.00

4.50 4.00 4.00 3.90

3.20 2.50 2.50 2.50 2.44

2.00 2.00 2.00

0 5 10 15 20 25 30

DnB

HSH Nordbank-only core

Bank of China*

KfW

Nordea

ICBC*

Korea Exim*

Commerzbank*

DVB

BTMU*

RBS

China Exim

Nord LB

BNP Paribas

Credit Suisse*

HSBC

Credit Agricole*

SMBC*

ABN Amro

Citibank

Bremer Landesbank

Deutsche Shipping - Deutsche Bank

ING

Danish Ship Finance

Unicredit

Standard and Chartererd

DBS (Development Bank of Singapore)

Santander*

SEB*

Danske Bank/Fokus Bank*

Japan Bank for International Co-operation*

Piraeus Bank*

National Bank of Greece

Lloyds Banking Group**

NIBC

Commonwealth Bank of Australia*

Alpha Bank

Societe General*

Deka*

CIT Group*

Bank ship finance based on data up to November 2014 – in $bn

Top 40 Bank Lending to Shipping PETROFIN RESEARCH

www.petrofin.gr Graph 2

Source: Petrofin Bank Research November 2014

462.9

436.18

449.76

454.89

422.135

400.89

391.45

340

360

380

400

420

440

460

480

2008 2009 2010 2011 2012 2013 2014

• In 2013, the top 6 banks’ share was approx. 30.7% (with a combined portfolio of $123.06bn).

• For 2014, the top 6 banks’ share is 32.16% (with a combined portfolio of $125.88bn)

• Lastly, European bank exposure accounts for 70.55% in November 2014. Last year, European bank exposure accounted for 71.61% in November 2013 . Going back, they held 83.12% of the top 40 total in 2010 and 81.69% up to November 2011 and 75.13% in November 2012.



Top 40 banks in terms of geographical position, portfolios and percentage hold of the totals – 2010 to 2014

PETROFIN RESEARCH www.petrofin.gr Source: Petrofin Bank Research November 2014

Graph 3

-$40.00

$10.00

$60.00

$110.00

$160.00

$210.00

$260.00

$310.00

$360.00

$410.00

$460.00

Europe USA Far East and Australasia

$373.86

$9.50

$66.40

360.88

7.51

86.50

317.14

12.00

93.00

292.09

10.80

98.00

276.15

10.30

105.00

2010 2011 2012 2013 2014

Graph 4

Germany

Holland

France and Belgium

UK and Ireland Other

Greece

PETROFIN RESEARCH www.petrofin.gr European banks – Comparison between 2010 and up to

November 2014

0

20

40

60

80

100

120

140

160

UK and Ireland France and Belgium Holland Germany Greece Scandinavia Other European

53.86 36.7

13

154.44

12.78

82.58

20.5

53

32

18

151

10

82

15

44

27

18

141

6

67

15

39

27 20

113

7

67

20 32

23 18

112

10

62

20

2010 2011 2012 2013 2014

Graph 5

Holland

France and Belgium

UK and Ireland Other

Greece


2008 - Value of Shipping Deals by Transaction Type (mil)

4%

0%

0%

4%4%

1%

5%

82%

Corporate Bond: $3,872

Convertible Bond: $325

Bank Loan: $83,630

IPO: $4,095

Follow-on: $4,155

Private Placement: $859

Equity (Other): $0

Leasing: $4,892

2013 - Value of Shipping Deals by Transaction Type (mil)

18%

1%60%

2%6%

7%

3%

3%

Corporate Bond: $11,330

Convertible Bond: $842

Bank Loan: $39,290

IPO: $1,565

Follow-on: $4,159

Private Placement: $4,469

Equity (Other): $2,204

Leasing: $2,306

Source: Dealogic

Trends in Ship Finance Sources

Germany

Holland

France and Belgium

UK and Ireland

Greece


Spreads paid by Borrowers, 2005-2014 (bps)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2005 2006 2007 2008 2009 2010 2011 2012 2013

0

50

100

150

200

250

300

350

<100

100-199

200-299

300-399

400-499

Average Spread

Average Loan Pricing

Source: Marine Money Bankers Survey 2014

1. In the last year (2014), the total world fleet has gone up from 1,689.5m. DWT to 1,746.8m. DWT, i.e. a growth of 3.39%. (Clarkson’s Shipping Intelligence Weekly – Jan 2015).

2. Despite the above, total bank ship finance debt is still falling, especially for the top 40 banks. This relates to deleveraging by banks and increasing reliance on other forms of finance and capital.

2. Current Ship finance trends


3. Ship finance activity is expected to start stabilizing this year and is expected to rise in 2016.

4. Global banking conditions (especially in the West) still remain unsupportive for ship finance (Basel III, liquidity and capital constraints), but the tide may be turning.

5. Current estimates by IMF for 2015 international trade growth is approximately 3.5%, rising to 3.7% in 2016. World bank corresponding figures are 3% and 3.5% respectively.



6. The fleet growth in 2014 decelerated, to 4% y on y growth in dry bulk. It is anticipated that as newbuilding orders in dry bulk have significantly slowed down and as newbuilding deliveries may be extended in the light of poor market conditions, that fleet growth for 2015 and 2016 may be matched by international trade growth.

7. The wet sector is showing a strong performance due primarily to the consequent effects of the low oil price and a slowdown in net fleet growth.

8. However, fleet supply growth is still constrained by port congestion, slow steaming (still prevalent) and longer routes despite a 27.5% reduction in scrapping in 2014.



9. A sustained fall in oil prices, if accompanied by a recovery in the shipping market, may result in reduced slow steaming.

10. Bank shipping loan provisions are peaking due to a) accelerated loan recoveries, b) sell off of portfolios, c) reduction of shipping exposure and d) shifting of risk between clients.

11. An increasing number of shipping banks’ loan portfolio sales have been achieved and / or are in progress involving RBS, Commerzbank, HSH, Lloyd’s Banking Group and others. Greek banks have started to divest shipping assets in a controlled and non aggressive manner



12. Equity funds’ interest in buying banks’ loan portfolios has increased but so have the desired discounts. This is directly related to the more attractive sale price set by banks for buyers due to poor shipping markets, declining loan values, poor client cashflow, pressure to dispose by central banks and higher discount values.

13. Shift of ship finance eastwards continues but at a slower pace.

14. Far Eastern ship leasing, export finance and bareboat deals only shall accelerate if a) market conditions improve and b) Chinese lending restrictions are eased



15. Private equity funds’ interest in shipping (Oaktree, Carlisle, Blushore Global Equity, Monarch Alternative, Nordic Capital, Eaton Park Capital, etc.) which exploded in 2012-2013, has now reduced to specialised sectors only. As equity funds have not achieved their rewards yet and some are showing negative returns, their commitment to shipping and patience is expected to be tested.

16. Private equity provided by individuals too has accelerated as there are powerful incentives for investing in shipping, e.g. real asset, still cash on cash positive earnings, tax, recovery. Hence, private equity has the advantage over equity funds, as it has a longer investment horizon and less pressure to exit at specific times.



2008 20092010 2011

20122013

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Private Equity Investment in Shipping

Source: Marine Money International,

January 2014

Graph 7

17. Cohabitation in loans/investments became more commonplace between banks, owners and equity providers.

18. Client selection has become excessive. The level of due diligence has intensified and is seen by many owners as being intrusive and extreme.

19. Has the ship financing model changed? Not really, but overall lending percentages have fallen, terms tightened, liquidity issues have risen to the top spot and banks revel in the prevailing low competition environment. However, the above are not necessary true for the top names including the strongest public companies.



20. Absence of ship finance and / or availability only under expensive/stringent conditions has resulted in many vessel purchases for cash. Given the low US Dollar deposit interest rates, shipping investments appear to still be attractive on a rebound basis.

21. The favourable to banks ship finance terms and conditions have brought forward a number of new and re-entering players, such as, CIT, RBC, Bank of Nova Scotia, HSH, Unicredit, Eurobank and others.

22. The number of existing players with a growing appetite is small but growing, e.g. ABN, Citi, Credit Suisse and all the Far Eastern Banks.



23. Most analysts still point to 2016 for a meaningful shipping and banking recovery assisted by solid increases in international trade. However, international growth expectations and global economy conditions remain at risk. Moreover, China and the Far East appear to be slowing down further.

24. Quantitative easing across the world, as well as low LIBOR is helpful to shipping.

25. In conclusion, a market recovery is expected to be a long drawdown affair with numerous technical rallies and falls, but expectations of a recovery in 2016 appear quite probable. Shipfinance is still expected to turn around from 2016 onwards, as 2015 shall still be a year of adjustment.



naftemporiki shipping forum nd january 2015 trends in ... · 1st naftemporiki shipping forum 22nd...

Documents