Global Capital Forum 4th February 2014 King George Palace Hotel Increasing commitment towards purchases and newbuilding orders by Greeks. How are these funded? presented by Ted Petropoulos HEAD PETROFIN RESEARCH Presentation outline 1. Shipfinance and acquisition trends – the Greek story and Globally 2. Sources of finance for vessel acquisition 3. The funding situation 4. Summary and Conclusions PETROFIN RESEARCH www.petrofin.gr 1. Ship finance and ship acquisition trends The Greek story • In 2013, the Greek orders amounted to 275 (compared to 881 in 2012Clarksons), 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) PETROFIN RESEARCH www.petrofin.gr 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. PETROFIN RESEARCH www.petrofin.gr 1. Ship finance and ship acquisition trends Globally • 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 PETROFIN RESEARCH www.petrofin.gr 1. Ship finance and ship acquisition trends 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). PETROFIN RESEARCH www.petrofin.gr Bank Lending to Shipping PETROFIN RESEARCH www.petrofin.gr Ship finance based on interim data up to beginning December 2013 – in $bn • • Top 40 banks as of beginning December 2013: $404bn November 2012 - Top 40 ship finance banks’ portfolios stand at approximately at $422.135bn 29.96 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* * Market estimate 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 Graph 2 PETROFIN RESEARCH Top 40 Bank Lending to Shipping www.petrofin.gr Ship finance based on data up to beginning December 2013 – in $bn 470 462.9 460 454.89 449.76 450 440 436.18 430 422.135 420 410 404.19 400 390 380 370 2008 2009 Source: Petrofin Bank Research December 2013 2010 2011 2012 2013 1. Ship finance and ship acquisition trends Globally • 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% beginning December 2013. PETROFIN RESEARCH www.petrofin.gr at Top 40 banks in terms of geographical position, portfolios and percentage hold of the totals – from 2010 to beginning December 2013 Graph 3 $460.00 $410.00 $373.86 360.88 $360.00 317.14 290.39 $310.00 $260.00 $210.00 103.00 $160.00 93.00 86.50 $110.00 $66.40 $60.00 $9.50 12.00 7.51 10.80 $10.00 Europe USA Far East and Australasia -$40.00 2010 Source: Petrofin Bank Research December 2013 2011 2012 2013 PETROFIN RESEARCH www.petrofin.gr European banks – Comparison between 2010 and up to beginning December 2013 PETROFIN RESEARCH www.petrofin.gr Graph 4 Other154.44 160 $151.32UK and Ireland 141.04 140 Scandinavia France and Belgium 120 112.55 Holland 100 Greece 82.58 $82.03 80 60 Germany 53.86 $53.35 36.7 43.5 40 66.65 65.6 $31.84 38.5 20.00 27.2 18.1 26.50 $17.62 12.78 13 20 20.5 $9.72 20.00 $15.00 14.75 5.895 7.250 0 UK and Ireland France and Belgium Holland Germany 2010 2011 2012 Greece 2013 Scandinavia Other European PETROFIN RESEARCH www.petrofin.gr 2. Sources of finance for vessel acquisition Second hand purchases • 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) 2. Sources of finance for vessel acquisition Second hand purchases continued • 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: PETROFIN RESEARCH www.petrofin.gr rapidly increasing/depending on owner 2. Sources of finance for vessel acquisition Newbuilding acquisitions • 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) PETROFIN RESEARCH www.petrofin.gr 2. Sources of finance for vessel acquisition Newbuilding acquisitions continued • 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% PETROFIN RESEARCH www.petrofin.gr 3. The funding situation Sources – January 2012 Sources – January 2014 Unfunded Orderbook, USD 115, 9% Unfunded Orderbook, USD 47, 4% Government, USD 60, 6% Bonds, USD 94, 7% Bonds, USD 59, 5% private Equity, USD 246, 22% Government, USD 137, 11% private Equity, USD 278, 22% Public Equity, USD 223, 20% Public Equity, USD 190, 15% Bank Debt, USD 455, 36% Bank Debt, USD 477, 43% 2012 - World Fleet & Orderbook Value USD 1.112 trillion Source: Tufton Oceanic data 2014 - World Fleet & Orderbook Value USD 1.269 trillion 3. The funding situation Uses – January 2012 Uses – January 2014 Dry, USD 281, 22% Dry, USD 258, 23% Offshore, USD 363, 33% Offshore, USD 528, 42% Wet, USD 266, 21% Wet, USD 252, 22% General Cargo, USD 74, 7% Container, USD 165, 15% Source: Tufton Oceanic data General Cargo, USD 65, 5% Container, USD 130, 10% 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 PETROFIN RESEARCH www.petrofin.gr Thank you PETROFIN RESEARCH © www.petrofin.gr February 2014