JB's weekly round up - 25 Aug 2014
The soggy, grey skies and grinding traffic of the UK August bank holiday usually signal one thing - time to get back to business.
Welcome to the weekly round-up of the TXF news service
That was the week that was
The soggy, grey skies and grinding traffic of the UK August bank holiday usually signal one thing - time to get back to business. TXF has been beavering away to deliver you a comprehensive programme of news, reports and events over the next few months.
We have a few dates for your diary: ECA finance events in Frankfurt (9th October), Hong Kong (25th November) and the return of our Paris shindig (2/3 June, 2015). We will also be hosting our Trade & Treasury event – Trade Finance, Supply Chain, and Working Capital Optimisation– in Munich on 9/10 December (try saying that after a few steins!).
Also look out for our Sibos 2014 report, the ‘Berne Union +20’, and our Export Finance market report, all due this September. And of course, be sure to continue to visit TXF news andtagmydeals for the latest stories and deals in the world of trade and export finance.
Fin4Ag post conference report
TXF has completed the Fin4Ag ('finance for agriculture', just in case you don’t do acronyms)post conference report, which is a collection of articles reflecting on the CTA/AFRACA conference held in Nairobi, Kenya in July. The whole report and the individual articles are available to view or download. There are a wide selection of topics covered, including warehouse receipt financing, the growth of commodity exchanges, collateral management and capital markets within agri-finance. If you have any interest in agri-financing then there will surely be something within the report for you.
At a conference where there were some 800 attendees, what was pretty astonishing to me was how few international banks were in attendance, and even big African banks missing. Africa and agri does exist! Some things may start small – but they grow or consolidate. My old school motto comes to mind – e glande quercus, out of the acorn the oak. You banker folk need to get out more!
ING Frankfurt appoints new head of natural resources
ING Commercial Banking in Frankfurt is continuing its expansion with the appointment of Crina Nechifor as head of natural resources and structured metals and energy finance.
Welcome back to ING Crina! Up until May this year, Crina was head of corporate finance with the Russian metals and mining company Mechel. But before that, she worked for 17 years with ING in various departments. The move on the commodity front in Germany is indicative of the push the bank is making in booking deals out of Frankfurt, and follows a bigger profile for the bank’s export finance team based in Frankfurt.
Standard Bank pinpoints suspected Chinese fraud
Strewth! Is there no end to what the scandal surrounding dealings at Qingdao port is going to throw up? And, who knows where this may yet lead – it rather seems this is the thin edge of a much wider problem in China. But for everybody’s sake – unless you are a lawyer perhaps – we certainly hope not.
In this latest revelation, Standard Bank has announced in its half-year accounts that it has taken a ZAR854 million (approximately $79 million) hit on its income due to warehouse dealings in Qingdao port. Legal proceedings have been launched against several parties.
What strikes me in all these instances is the whole issue of collateral management related to warehouse receipt financing or repo deals. You have a supposedly secured deal, but who is actually looking after your goods/product? And, who is looking over the person/company that is supposed to be looking after your goods/product? It is the big issue, and one which requires the utmost immediate attention, or you can say goodbye to warehouse receipts as being secured business.
Rusal fully completes refinancing
We have written much about Rusal’s proposed refinancing of its pre-export financing arrangements over the past couple of months. Now, finally, the whole refinancing issue is settled, with the amendment agreement signed 18 August and effective 20 August 2014. See the full details here.
It is a relief to all that the deal has been done, as it did appear at one time that the proposed deal would run into problems with some of the creditors having initial objections. Perseverance has paid off. The maturity on the new deal takes the PXFs through to December 2018 and 2020.
Rosneft and North Atlantic Drilling sign asset exchange deal
Now here is an unusual deal – but we live in unusual times, and this deal is just straight smart commerce for the corporates concerned. Rosneft, Seadrill and North Atlantic Drilling Limited (NADL) have signed a unique framework agreement that envisages long-term cooperation. Within that, NADL will acquire approximately 150 land drilling rigs from Rosneft, along with the award of new five-year drilling operation contracts with Rosneft for these units. In return Rosneft will receive an approximate 30% stake in NADL. The share purchase is valued at approximately $1 billion. There is much more to this, so have a look at the full details. Following the transaction, Seadrill – which currently owns 70% of NADL’s shares – will continue to own more than 50% of NADL.
Star Bulk acquires drybulk vessels
And on a similar theme, we see another big exchange deal taking place in the market, this time in the shipping sector. Athens-headquartered shipping company Star Bulk Carriers Corporation (Star Bulk) has signed agreements with Excel Maritime Carriers (Excel) to acquire 34 operating drybulk vessels for an aggregate of 29.917 million shares of common stock of Star Bulk and $288.39 million in cash.
The vessel purchase transactions are estimated to amount to $634.91 million. See how the deal is structured here. Star Bulk expects to use cash on hand, together with borrowings under a new $231 million secured bridge loan facility extended to the company by entities affiliated with the company's largest shareholder. Quite amazing, in the old days we used to call these sort of deals (this and the Rosneft/NADL deal) ‘countertrade’.
US Ex-Im reauthorisation: see nothing, hear nothing, do something
With US Ex-Im’s mandate about to expire on 30 September this year, the battle for approval for reauthorisation of that mandate is intensifying. In this article, TXF content manager Hesham Zakai spells out the key elements of the debate that is taking place. It is essential reading –check it out here.
From my own perspective, the ‘kill-it’ brigade in the US has had far too much say, and much of that rhetoric has been absolute nonsense. It is time for those that are involved in export finance in the US to put their weight behind US Ex-Im and give it the support it needs. Sure, we all know of instances where the agency should not have been involved in a direct loan – but overall, US Ex-Im is doing the country a great service and is needed by US exporters, large and small (direct and indirect) alike. So come on – do something!
As a reminder, support can be registered through either of these petitions: Ex-Im Thought Bank and Second to None.
KfW IPEX shows its client depth with Brazilian financing
In KfW IPEX-Bank’s most recent financing, the bank clearly shows the depth of its client base, with the provision of export credit financing amounting to €51 million ($68.3 million) to Brazilian-based Berneck Painéis e Serrados (Berneck).
The financing will fund the supply of equipment from various small and medium-sized enterprises from Germany and other parts of Europe. KfW has a long history of working with Berneck, having financed the first production facility for particle boards in 2001. Details of the deal can be seen in the news report.
JBIC leads Asian banks in Lao hydro-power deal
In a ‘first’ for the Japan Bank for International Cooperation (JBIC), the agency is combining with commercial banks to arrange $643 million in financing for a hydro-power project in the Lao PDR. JBIC itself is contributing some $200 million. See which commercial banks are involved here.
The Asian Development Bank (ADB) is also involved providing dollar and baht financing. The project – involving the Nam Ngiep 1 Power Company, owned by Japan’s Kansai, EGAT International of Thailand and the Lao government – is a 290MW hydro-power plant.
TMD FEATURED DEAL: Ocean Partners, the base metals trader, has expanded and extended its existing revolving credit facility (RCF). The borrowing base is now $250 million – an increase of $90 million on the existing facility, which has been extended by a further 12 months. See tagmydeals for full details.
|Deal Volume||$ 250m|
|Deal Type||Commodity Trade Finance (all)|
|Sector||Revolving credit facility|
|Industry||Metals & Mining|
|Documentation Agent||ING Bank|
|Facility Agent||ABN AMRO Bank|
|Lenders||ABN AMRO Bank, Bank Leumi, Banque Cantonale Vaudoise, Banque de Commerce et de Placements, Credit Suisse, HSBC, ING Bank, Rabobank, Standard Chartered, UBS|
|ABN AMRO Bank||$35m|
|Banque Cantonale Vaudoise||$15m|
|Banque de Commerce et de Placements||$15m|
Last week, when writing about Tanzania, I posed the following question: on which UK premier league football club website home page is there a button ‘Visit Tanzania’ – which takes you through to the Tanzanian Tourist Board?
The answer is of course my home town football team (oh yes!) Sunderland. The winner of that was Willem Klaassens, CFO with Clearsource in Singapore (yes, Willem is a very good friend of mine, but this wasn’t fixed – honest. In fact, it was the first time I’d heard from the cricket-playing Dutchman in ages!)
Anyway, thanks to all who responded. What I should have also asked with this question was –why is there this reference to Tanzania there? This might have made it a bit trickier. To clear all that up, you need to note that Sunderland AFC through the 2012-2013 season had oil exploration company Tullow Oil as one of its major sponsors – with the shirt message ‘Invest in Africa’ (a not-for-profit initiative by Tullow to help promote investment in Africa).
OK, there is an awful lot more to this – so I wont indulge too much more, but the point I want to make is that while premier league clubs usually have such predictable sponsors like betting websites or pay-day loan outfits (there is one with an international bank, but we won’t mention that club here, and of course good old Spurs with AIA insurance sponsorship), my good old north-east England town had a true link to the emerging markets in Africa. Ha’way the lads!
That’s all folks.