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www.wmu.se • [email protected]

Executive Education and Professional Development

Personal Development, Global Impact

Supported by MPA Academy, Singapore and MCF Training Grant is available for eligible participants. Please refer to www.mpa.gov.sg/mcf for further information


REGISTRATION To register please send and email together with a scanned copies of your passport and/or residence permit to [email protected]. The course fee is S$4,160 per course and the courses are supported by MPA Academy, Singpaore and MCF Training Grant for eligible participants. Please refer to http://www.mpa.gov.sg/web/portal/home/maritime-companies/setting-up-in-singapore/developing-manpower/maritime-cluster-fund-mcf for further information about the grant.


SHIPPING DERIVATIVES AND RISK MANAGEMENT EXECUTIVE COURSE

SHIPPING FINANCE AND INVESTMENT EXECUTIVE COURSE

The course examines the problems, issues and alternative methods involved in shipping finance and investment appraisal, focusing on the critical evaluation of the various financial methods under risky and uncertain situations. General principles of shipping financial management and the impact of economic variables on the financial operations of shipping business organizations are presented and analysed. Finally, the course enhances the participants understanding of the strategic challenges in shipping, including operational and commercial issues and financial management.

Learning Outcomes By the end of the course, participants should be able to: • Understand financial management principles and analysis for investment purposes in shipping • Develop cash flow budgeting and investment appraisal for shipping projects • Appraise alternative sources of capital for shipping projects • Analyse shipping bank loans and the issuance of private and public equity and debt • Evaluate alternative sources of ship finance • Explain key strategic issues in decision-making, within all sectors of the shipping industry

Teaching and Learning Methods Classroom activities: teaching, case study discussions, practical exercises, presentations, round table interactive discussions.

Who Should AttendThe course can be attended by shipowners and CEOs, Treasurers and CFOs, managing directors, ship operators, port operators, crew managers, ship managers, chartering managers, operations managers, charterers, shipbrokers, accountants, financial analysts, bankers, shipping fund investors, freight and logistics providers, and maritime insurance professionals.

Ioannis Alexopoulos has more than 15 years of professional experience in the shipping, banking and the maritime finance industries. He is a Director at the Athens office of Eurofin Group; a ship-financing, investment boutique established in 1984 with offices in London, Athens and Singapore. Mr. Alexopoulos gained experience in shipping through short-term employments with Golden Union Shipping Co. (which included time at sea), Carriers Chartering S.A. in Piraeus and Angus Graham & Partners in London. He then joined Laiki Private Banking in Cyprus, an HSBC Group associate in 1999 where he held positions in both portfolio management and client advice, servicing expatriate as well as offshore High Net Worth Individuals. He joined the Athens office of Eurofin Group in 2002 and

is responsible for the Group’s ship financing operations in Greece. In addition he is a key part of the Eurofin team, which acts as a Consultant to KfW IPEX-Bank for its Greek debt shipping portfolio. He has delivered a number of speeches on ship finance, at several Shipping and Ship-finance Conferences around the world. He holds a BSc in Economics and Business Economics from Southampton University and an MSc in Shipping, Trade and Finance from Cass Business School.

Profile of Instructor

Duration: 3 days Number of credits: 1.5 ECMode of delivery: Open-enrolmentLocation: MPA Academy, Singapore Time of delivery: 23-25 May 2016


Day 1: Bank (Mortgage) Shipping Finance The Global Debt Ship-Financing Industry • Sources of Ship-Finance • Shipping Banks • The ‘Plain Vanilla’ Term Loan • Facility • Borrower and Lender Objectives • Shipping Finance (before & after • the crisis) • Current shipping environment • Who is Lending & Where the • Capacity is Flowing To

Bank Credit Policy and Credit Analysis • Bank Credit Policy • Shipping Bank Aims • Borrower’s & Lenders Objectives • Bank Syndication in Shipping • Bank Credit Analysis

Bank Loan Legal Considerations, Workouts • The Term Loan • The Indicative Letter & Commitment • Letter • Pricing the Loan • The Documentation Process & the • Loan Agreement • Securities in Ship-Finance • The Value Maintenance Clause • Workouts

Examples of Ship Financing

• Second-Hand Vessel Financing • Assumptions • Cash-Flow Loan Analysis

• Newbuilding Financing • Factors & Financing Options • Pre-Delivery Payments • Pre-Delivery Securities • Pre-Delivery Finance • Post-Delivery Finance

Day 2: Alternative Sources of Shipping Finance Asian Ship Finance • Ship-Finance from Asian Banks • Why they are important • Who are the Ship-Financiers • Pre-requisites • Recent Shipping Transactions

Export Credit Agencies (ECAs) • Considerations • Advantages • Examples

Private and Public Equity Markets and Shipping Industry • Private Equity • Private Equity in Shipping • (Key Elements) • Private Equity Placement (144 A) • Private Equity & 144 A • (Advantages & Disadvantages)

• Public Equity • Public Equity & Shipping (historical • overview) • Shipping IPOs process • Advantages / Disadvantages • Key Considerations for Shipping • IPOs • Practical Issues in IPOs • The Underwriter • Registration & Prospectus • IPO Pricing & Pricing Stylized Facts

High Yield Shipping Bond Markets • Shipping High Yield Bonds • History of Shipping HY Bonds • Issuance of HY Shipping Bonds • Credit Rating of Bond Issues • SEC Registration • The Underwriter • The Prospectus • Advantages / Disadvantages • Equity vs. Debt

Mezzanine Finance • Mezzanine Finance Overview • Forms of Mezzanine Finance • Preference Shares / Subordinated • Debt • Hybrids; Convertible Bonds & • Warrants • Providers of Mezzanine Finance in • Shipping • Key requirements by Mezzanine • Financiers • Advantages & Disadvantages

Ship Leasing Structures • Sale & Leaseback • Advantages / Disadvantages • Institutional Investors • KG/KS Financing

Day 3: Financial Shipping Management Capital Budgeting & Investment Appraisal • Capital Budgeting • Independent vs. Mutually Exclusive • Projects • Payback Period • Net Present Value (NPV) • Internal Rate of Return (IRR) • Modified Internal Rate of Return • (MIRR) • Replacement Chain Approach • (Example) • Project Cash-Flow Analysis (Example) • Maritime Capital Budgeting Exercises

Cost of Capital in Shipping • Cost of Equity (CoE) • Estimation of Beta: Measuring • Market Risk • Determinants of Beta: • Cyclicality of Revenues • Operating Leverage • Financial Leverage • Capital Budgeting & Project Risk • Weighted Average Cost of Capital • (WACC)

Capital Structure in Shipping • Capital Structure and Firm Value • Capital Structure Theory (Modigliani • and Miller -MM) • MM Propositions • I & II (No Taxes): Leverage Irrelevant • I & II (With Taxes): Leverage is Relevant • Bankruptcy Costs • Integration of Tax Effects and • Bankruptcy Costs

Exercises on Cost of Capital & Capital Structure

Shipping Finance & Investment Course Outline




This course provides an advanced knowledge of shipping risk management and shipping derivatives. It provides a critical understanding on how all methods of shipping risk management, including shipping derivatives, can be applied in the day-to-day business practice in shipping. The course develops an understanding of the strategic challenges in shipping, including operational and commercial issues and financial risk management. The course syllabus follows the experience and high quality work of the instructor. More than ten years of work is embedded in this course, which brings participants to the latest developments in the areas of risk management and derivatives in shipping. The course has a fine balance between academic capacity and practical understanding, in providing the skills to participants to readily apply the knowledge in business practice. The course includes practical exercises, interactive discussions and a hands-on simulation in order to offer to participants a practical experience.

Learning OutcomesBy the end of the course, participants should be able to: • Explain key strategic issues in decision-making, within all sectors of the shipping industry • Recognise the risk-return trade-offs and the sources of business risks in shipping • Apply risk management strategies, with the use of shipping derivatives in freight rates, bunker fuel prices, vessel prices, foreign exchange rates and interest rates

Teaching and Learning Methods Classroom activities: teaching, case study discussions, practical exercises, presentations, round table interactive discussions.

Who Should AttendThe course can be attended by shipowners and CEOs, Treasurers and CFOs, managing directors, ship operators, port operators, crew managers, ship managers, risk managers, chartering managers, operations managers, charterers, shipbrokers, accountants, financial analysts, bankers, freight traders, shipping fund investors, freight and logistics providers, and maritime insurance professionals.

Prof. Ilias Visvikis is a Professor of Shipping Finance and Risk Management and the Director of Executive Education and Professional Development at World Maritime University (WMU) in Malmö (Sweden), founded by the International Maritime Organization (IMO), a specialized agency of the United Nations. He is the Co-Director of the Postgraduate Diploma in Executive Maritime Management, co-delivered by WMU and DNV GL Maritime Academy. Prof. Visvikis has taught at several universities around the world, while he has an extensive international experience in consultancy and executive education. He has trained managerial-level maritime professionals in the areas of shipping finance and shipping freight derivatives from numerous companies

around the world. His research interests concentrate on shipping finance and investments, freight derivatives (FFAs), shipping risk management and the econometric analysis of shipping markets. His research work has been published in leading international refereed scientific journals, books and magazines, and has received numerous citations. He is the co-author of the Derivatives and Risk Management in Shipping (2006), the first comprehensive book published in the area, and the co-editor of the Theory and Practice of Shipping Freight Derivatives (2011), receiving numerous testimonials both from academia and the business industry. He has extensively presented his work in international academic and business conferences held in USA, Europe and Asia. He serves as an editorial board member of several scientific journals, while he has served as member of conference steering committees, and reviewer for several scientific journals. He holds a Degree in Business Administration from University of Aegean (Greece), a MSc in International Financial Markets from University of Southampton, a MSc in International Shipping from University of Plymouth, and a Ph.D. in Finance from Cass Business School, City University in London.

Profile of Instructor

Duration: 3 days Number of credits: 1.5 ECMode of delivery: Open-enrolmentLocation: MPA Academy, Singapore Time of delivery: 14-16 September 2016


Day 1: Sources of Business Risks in Shipping and Freight Rate Risk Management Sources of Business Risks in Shipping and Risk Management Strategies • Commercial Risks (freight rate, • bunker fuel, vessel prices, FX, and • interest rate) • Charterparty contracts and Risk • Vessel Type and Risk • Volatilities of Vessel Values and • Earnings • Time-Varying Volatilities of Freight • rates • Seasonality Strategies in Freight • Markets • Traditional Risk Management • Strategies in Shipping

Introduction to Hedging with the use of Financial Derivatives • Hedging Risk • Futures, Forward, Swap and Options Derivatives Markets • Trading Positions of Derivatives • • Contracts • Basis and Basis Risk • Credit Risk and the Clearing • Mechanism of Derivatives • Contracts • The Economic Functions of • Derivatives Contracts

Overview of Freight Derivatives and Risk Management • Underlying Assets of Freight • Derivatives • Freight Derivatives Markets • Dry-bulk and Tanker Forward • Freight Agreements (FFAs) • Cleared FFAs • Freight Futures and Clearing • Trading Screens • Containership Freight Swap • Agreements (CFSA) • RMB-denominated FFAs

Day 2: Shipping Freight Rate Risk Management Freight Rate Derivatives Trading • Freight Derivatives Contract • • Specifics • Practical Freight Trading Examples • (voyage, time-charter, monthly, • quarterly, calendar hedges) • Freight Derivatives Strategies for • Banks and Financial Institutions • Trading Steps for Newcomers • Benefits and Important Issues in • FFA Trading • Setting Up a Trading Desk Freight Options • Options Markets • Examples with Freight Options • Directional Options Trading • Volatility Options Trading • Advanced Trading Strategies with • Freight Options • Pricing Freight Options • Factors Influencing Options Values • Options Pricing Models

Advanced Derivatives Modelling Techniques • Futures/Forward Pricing (Fair • Value) • Pricing Models for Storable and • Non-Storable Commodities • Optimal Hedge Ratios • Hedging Effectiveness • Measurement • Value at Risk (VaR) Models in • Shipping • Application of VaR in FFA Positions • Credit Risk Management

Day 3: Risk Management in Commercial Shipping Operations

Bunker Fuel Risk Management • Factors Affecting Bunker Fuel • Prices • Bunker forwards, Swaps and • Futures • Bunker Fuel Risk Management • Simulation Game • Vessel Price Risk Management • The Second Hand (S&P) Market • Baltic Sale and Purchase • Assessments (BSPA) • Sale and Purchase Forward • Agreements (SPFA) • Baltic Demolition Assessments • (BDA)

Foreign Exchange and Interest Rate Risk Management • Interest Rate Futures and Options • Interest Rate Swaps and Options • Practical Examples • Foreign Exchange Hedging • Currency Risk Management

Shipping Deritvatives & Risk Management Course Outline


About WMU Our visionWMU’s mission is to be the World Centre of excellence in postgraduate marit ime and oceans education, professional training, and research, while building global capacity and promoting sustainable development. Our mission and goalsAs the International Maritime Organization’s centre of excellence for postgraduate maritime education, our mission is to serve the global maritime community through education, research, and capacity building to ensure safe, secure and efficient shipping on clean oceans. WMU offers a unique postgraduate educational programme, undertakes wide-ranging research in maritime and environmental studies, and continues maritime capacity building. Working closely with our stakeholders, including IMO, the maritime industry, national maritime administrations, and NGOs, WMU is positioned to:

• Help build a more environmentally sensitive and sustainable world through education and research in the maritime sector

• Educate future global maritime leaders• Contribute to maritime capacity building and the

development of effective policies of equal opportunity for the global maritime community

• Provide an international focus and forum for networking and collaboration on critical issues and developments in maritime transportation worldwide

Our aimsThe University was established in 1983 by the International Maritime Organization (IMO) to increase the number of highly qualified specialist maritime personnel in countries across the world. With such specialists, international maritime conventions can be implemented for the benefit of the whole global community. Maritime safety can be improved, the marine environment better protected, and international shipping and ports made more efficient. Specialists in developing countries can make sure that economic growth in the maritime field is sustainable, with integrated planning for the oceans allowing each sector to develop without damage to any other. But beyond these immediate practical aims, the University is a forum for people of many nationalities to participate in teaching and learning. Our goals are to foster tolerance, to encourage international co-operation, to solve international maritime problems, and to co-ordinate action internationally. WMU educates people for the benefit of their countries. Our students benefit from the postgraduate maritime education we offer. As WMU graduates, they return to their home countries and, in turn, transfer their newly gained expertise to colleagues, helping their nations to achieve the highest practicable standards in maritime transportation and development.


World Maritime University, PO Box 500, S-201 24 Malmö, Swedenwww.wmu.se • [email protected]

Fax: +46 - 40 - 12 84 42The World Maritime University was established under the auspices of the

International Maritime Organization, a specialized agency of the United Nations.

INTERNATIONALMARITIMEORGANIZATION

personal development, global impact epdc... · • explain key strategic issues in decision-making,...

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