Ship Finance Basics
Transcript of Ship Finance Basics
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Ship Financing The Basics
On behalf of HVB Global Shipping
Welcome to
WISTA CONFERENCE HAMBURG 2005
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Ship Financing The Basics
God must have been a shipowner. He placed
the raw material far from where they are
needed and covered two thirds of the earth
with water.
Erling Ness
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Ship Financing The Basics
Contents
3. Main Considerations
4. Financing Solutions
5. HVB Global Shipping
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Ship Financing The Basics
Contents
3. Main Considerations
4. Financing Solutions
5. HVB Global Shipping
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Ship Financing The Basics
1. Main Considerations
Different Types of Vessels
require Different Finance Solutions, e.g.
Project Finance vs. Corporate Finance
Spot Employment vs.
Long Term Contracts / Liners
but there is more to consider
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Ship Financing The Basics
Borrower
Main
Considerations
Type of Vessel
Leverage
Loan Period
Employment
Security
Pricing
Portfolio
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Ship Financing The Basics
1. Main ConsiderationsBorrower
Financial Performance, Rating
Management (technical / commercial)
Reputation, Experience, Track Record
Market Position
Strategy
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Ship Financing The Basics
1. Main ConsiderationsType of Vessel
Newbuilding vs. Second Hand
Age and estimated Use of Life
Liquid Asset or Special Type
Second Hand Market
Age Distribution of World Fleet vs. Order
Book
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1. Main ConsiderationsType of Vessel NO GOES
Quelle: www.paris-
mou.org
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Ship Financing The Basics
1. Main ConsiderationsLeverage
Building Price / Purchase Price vs. Market
Value
Market Volatility
Employment / Market Situation
Equity Contribution
Liquid Asset vs. Special Tonnage
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1. Main ConsiderationsLeverage - continued
Deutsche Schiffsbank's Henning Wintersaid
... 60% gearing had proved to be a
"bloody good rule" so far,
giving the banks "ample breathing space".
Quelle: Trade Winds 19.04.2002
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Ship Financing The Basics
1. Main ConsiderationsLoan Period
Repayment Schedule
Balloon
Profile
Age at Maturity
Loan to Value Ratio
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Ship Financing The Basics
1. Main ConsiderationsEmployment
Spot Trading / CoAs / Pool Arrangments /
Time Charter / Bare Boat
Risk of Re-Employment
Cash Flow Analysis
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Ship Financing The Basics
1. Main ConsiderationsSecurity
First Priority Mortgage
Personell or Corporate Guarantee
Assignment of Income & Insurances
Documentation: e.g. Law, Covenants such
as MVC, Financial Covenants on Borrower /
Guarantor, cross default
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Ship Financing The Basics
1. Main ConsiderationsPricing
Risk Adequate Margin over LIBOR
Grid Pricing
Underwriting Fee & Participation Fee
Commitment Fee
MEET YOUR RETURN REQUIREMENTS
BUT REMEMBER THERE ARE
COMPETITORS
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Ship Financing The Basics
1. Main ConsiderationsPortfolio
Tonnage Diversification
Average Loan to Value
Repayment Profile
Market Situation in terms of
VALUES, RATES, PRICING
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Ship Financing The Basics
1. Main Considerationslast but not least
EXPECTATION OF YOUR CLIENT
High Leverage, Low Equity
Long Loan Period
Low Pricing
No Covenants
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Ship Financing The Basics
Contents
3. Main Considerations
4. Financing Solutions
5. HVB Global Shipping
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Ship Financing The Basics
2. Financing Solutions
Plain Vanilla Asset Finance
Structured Project Finance
Corporate Finance
Leasing Structures
German KG
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Ship Financing The Basics
2. Financing SolutionsPlain Vanilla Asset Finance
s e.g. VLCC
s spot trade
s non-recourses reputable manager
60% leverage
8 12 yrs term
15 yrs profile (max.)
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Ship Financing The Basics
2. Financing SolutionsStructured Project Finance
s e.g. LNG Carrier
s long term time charter
contract with energy
major
s technial
management !!!
up to 90% leverage
10 - 15 yrs term
15 - 20 yrs profile
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Ship Financing The Basics
2. Financing SolutionsCorporate Finance
s e.g. Cruise Vessel
s listed corporates as
borrower
s generally no mortgage
RCF in large syndicates
5 7 years
bullet
generally undrawn
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Ship Financing The Basics
2. Financing SolutionsLeasing Stuctures
s e.g. LNG/Container/Car
Carrier
s long term bare boat
charter
s industrial shipping / liner
industry
annuity style facility
10 15 yrs loan period
put option at maturity
tax benefits
documentation risk
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Ship Financing The Basics
2. Financing SolutionsKG Finance
s e.g. Container, Tanker,
LNG
s generally newbuildings
s long term time charter
s reputable charterer
s equity by privat German
investors
60 70 % leverage
10-12 yrs term
for long time rather closed
banking market
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2. Financing Solutions
Do you want to know more
please be kindly invited to join the afternoon
session.
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Ship Financing The Basics
Contents
3. Main Considerations
4. Financing Solutions
5. HVB Global Shipping
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Ship Financing The Basics
3. HVB Global Shipping
Market Experience: north of 30 years
Portfolio: north of EUR 4 bn.
Vessels: north of 800 vessels
Regions: world-wide
Offices: Hamburg, Piraeus, Oslo
Staff: in total 17 Relationship Managers, 15
Credit Specialists, 7 Team Assistants
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3. HVB Global Shipping
20% shareholder in Deutsche Schiffsbank
AG
Shareholder in First Ship Lease
Shipyard Consulting
we finance as well
BOXES,
TERMINALS and the
Offshore Industry
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3. HVB Global Shipping
come and visit us at
www.hvb.de/globalshipping
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Thank you very much for
your attention
Further questions??? Or contact me:Oliver Trennt, +49-40-3692-4069
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