Increasing commitment towards purchases and …...presented by Ted Petropoulos HEAD PETROFIN RESEARCH Global Capital Forum 4th February 2014 King George Palace Hotel Increasing commitment

presented by

Ted Petropoulos HEAD

PETROFIN RESEARCH

Global Capital Forum 4th February 2014

King George Palace Hotel

Increasing commitment towards purchases and newbuilding orders by Greeks.

How are these funded?

Presentation outline

1. Shipfinance and acquisition trends – the Greek story and Globally

2. Sources of finance for vessel acquisition

3. The funding situation

PETROFIN RESEARCH www.petrofin.gr

4. Summary and Conclusions

• In 2013, the Greek orders amounted to 275 (compared to 881 in 2012-Clarksons), up from 135 in 2012 (Sources: Moundreas and Naftiliaki). Greeks have ordered the most ships, about 25% of global orders, of a total value approx. $13bn (Source: Moundreas)

• In the S&P of second hand vessels, an overall of 1500 ships were bought, of which approx. 375 were bought by Greeks, followed by the Chinese with less than 125 (Sources: Naftiliaki, Allied Shipbrokers).

• Value for the Greek fleet (excluding rigs, offshore and cruises) estimated at US$101bn (Source: VesselsValue.com)


1. Ship finance and ship acquisition trends

The Greek story

• According to Petrofin Bank Research ©, lending into Greek shipping has been falling from $67.7bn end 2011 to $65.8bn end of 2012.

• We are in the process of completing Petrofin Bank Research as of end 2013. We anticipate a further drop in Greek shipfinance, in view of the condition of the remaining 5 Greek banks and of most of the other major lenders to Greek shipping adopting serious lending restrictions.



The Greek story

• Norwegians may not have ordered the most ships, but have spent the most money on orders (approx. 17bn worth of newbuildings, in 2013 (Source: Clarksons)

• Global ship lending figures (drawn and committed) as of November 2013 are estimated at $460bn (Petrofin Research ©).

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



Globally

• The Global Fleet value, excluding rigs, offshore and cruises is estimated at US$660bn (Source: VesselsValue.com)

• Tufton Oceanic have estimated that the value of the global fleet INCLUDING offshore, rigs, and all orders, but not cruises, as of January 2014, stands at US$1.269tr.

• In Graph 1, we present the latest Petrofin Bank Research ©, on the shipping loan portfolio of the top 40 global ship finance banks representing $404.19bn of total loans (87.86% of the total).



Globally

• Top 40 banks as of beginning December 2013: $404bn

• November 2012 - Top 40 ship finance banks’ portfolios stand at approximately at $422.135bn

Bank Lending to Shipping Ship finance based on interim data up to beginning December 2013

– in $bn


* Market estimate

29.96 21.6

19 18

17.5 17

16.5 16 15.93

15 15 15

14 14

12.5 12

11 10.8

10 10

8 8 8 8

7.2 6

5.5 5 5 5 5

4 3

2.5 2.5 2.5

2.25 2.25

2 1.7

0 5 10 15 20 25 30 35 40 45

DnB

Commerzbank

Bank of China*

KfW*

HSH Nordbank-only core*

ICBC*

Korea Exim*

RBS

Nordea

BTMU*

Nord LB*

DVB

BNP Paribas

China Exim*

Credit Agricole*+75%Emporiki

Credit Suisse*

HSBC

Citibank

SMBC*

ABN Amro

Bremer Landesbank*

Deutsche Shipping - Deutsche Bank*

Danish Ship Finance

ING*

Unicredit

Standard and Chartererd*

Lloyds Banking Group**

Danske Bank/Fokus Bank*

SEB*

DBS

Santander*

Japan Bank for International Co-operation*

Societe General*

National Bank of Greece*

Commonwealth Bank of Australia*

Piraeus Bank*

Deka*

Alpha Bank*

NIBC

Swedbank*

Ship finance based on data up to beginning December 2013 – in $bn

Top 40 Bank Lending to Shipping PETROFIN RESEARCH

www.petrofin.gr Graph 2

Source: Petrofin Bank Research December

2013

462.9

436.18

449.76

454.89

422.135

404.19

370

380

390

400

410

420

430

440

450

460

470

2008 2009 2010 2011 2012 2013

• Last year, the top 6 banks’ share was approx. 34.17% (with a combined portfolio of $144.25bn).

• This year the top 6 banks’ share is 30.45% (with a combined portfolio of $123.06bn)

• Lastly, European bank exposure accounted for 83.12% of the top 40 total in 2010

and 81.69% up to November 2011 and 75.13% in November 2012 and 71.84% at beginning December 2013.


Globally


Top 40 banks in terms of geographical position, portfolios and percentage hold of the totals – from 2010 to beginning December 2013

PETROFIN RESEARCH www.petrofin.gr Source: Petrofin Bank Research December

2013

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

290.39

10.80

103.00

2010 2011 2012 2013

Graph 4

Germany

Holland

France and Belgium

UK and Ireland Other

Scandinavia

Greece

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

beginning December 2013

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

$53.35

$31.84

$17.62

$151.32

$9.72

$82.03

$15.00

43.5

27.2 18.1

141.04

5.895

66.65

14.75

38.5 26.50

20.00

112.55

7.250

65.6

20.00

2010 2011 2012 2013

• Bank finance (Western banks): declining/highly depending on owner (The top 6 banks last year held a portfolio of $144.25bn, in May 2013 this stood at $135.5bn, whereas in December 2013 their collective portfolio was down to $123bn)

• Bank finance (Far Eastern banks): negligible

• Public markets: rising (Navios Maritime Acquisition acquired 2 bulkers at $160m, Star bulk spent $60m for 2 post-panamax, DHT

buys two second-hand VLCCs for $99m and many others)



Second hand purchases

• Export credit agencies: negligible

• Own capital resources: rapidly increasing

• International Private Capital (Equity funds): rapidly increasing/depending on owner

(Euronav's $1bn takeover of the the 15-strong VLCC fleet of Maersk Tankers. Equity from BHRCapital, Glendon Capital Management and Solus Alternative Asset Management, GoldenTree Asset Management, York Capital Management, BlueMountain Capital and Avenue Capital Group.) (Source: Tradewinds, Naftiliaki)

• Private capital: rapidly increasing/depending on owner



Second hand purchases continued

• Bank finance (Western banks): low/ highly depending on owner

• Bank finance (Far Eastern banks): increasing/ highly depending on owner (Costamare)

• Public markets: rising (Scorpio, Star Bulk, Blue Wall Shipping, New Lead etc.)

• Export credit agencies: increasing (ECGD, Coface, Hermes, GIEK, CEXIM – their export credit agency, Atradius)


Newbuilding acquisitions


• Own capital resources: increasing

• International Private Capital (Equity funds): rapidly increasing/depending on owner (Jeff Pribor (Jefferies’ head of investment) says owners should not fear a shipping recovery being wrecked by the run of money from the capital markets and private equity. Pribor asserted that the $8bn raised by listed shipping companies in 2013 and the potential $12bn private equity presence in the industry lack the scale to be a problem.

Euroseas

• Private capital (independent investors): rapidly increasing

• % of newbuilding finance covered: less than 25%


Newbuilding acquisitions continued



Sources – January 2012 Sources – January 2014

Government, USD 60, 6%

Bonds, USD 59, 5%

Public Equity, USD 223, 20%

Bank Debt, USD 477, 43%

private Equity, USD 246, 22%

Unfunded Orderbook, USD

47, 4%

Government, USD 137, 11%

Bonds, USD 94, 7%

Public Equity, USD 190, 15%

Bank Debt, USD 455, 36%

private Equity, USD 278, 22%

Unfunded Orderbook, USD

115, 9%

2012 - World Fleet & Orderbook Value USD 1.112 trillion 2014 - World Fleet & Orderbook Value USD 1.269 trillion

Source: Tufton Oceanic data


Uses – January 2012 Uses – January 2014

Dry, USD 281, 22%

Wet, USD 266, 21%

Container, USD 130, 10%

General Cargo, USD 65, 5%

Offshore, USD 528, 42%

Source: Tufton Oceanic data

Dry, USD 258, 23%

Wet, USD 252, 22%

Container, USD 165, 15%

General Cargo, USD 74, 7%

Offshore, USD 363, 33%

4. Summary and conclusions

1. Greeks remain totally committed to shipping, as the prognosis for shipping and especially dry and wet are very positive

2. Interest in acquiring more vessels is accelerating.

3. Every financial and private capital source is being exploited

4. Increasingly more reliance on own resources

5. Newbuilding order book remains largely speculative


Thank you PETROFIN RESEARCH ©

www.petrofin.gr

February 2014

Documents

Increasing commitment towards purchases and …...presented by Ted Petropoulos HEAD PETROFIN RESEARCH Global Capital Forum 4th February 2014 King George Palace Hotel Increasing commitment