Marubeni Corp has tapped the bond market to refinance two LNG carriers jointly owned with South Korea’s SK Shipping.
The Japanese trading house said the “project bonds” were collectively valued at about $380m in total. Further financial details were not disclosed.
Marubeni said the bonds’ proceeds were primarily used to repay in full the original bank loan financing for the South Korean built ships.
“The issuance of the bonds was aimed at eliminating the refinancing risk, improving finance costs and optimising the capital structure,” it said.
“In addition, they were privately rated investment-grade by an internationally recognised credit rating agency.
“They have been partially structured as a highly tailored, unique 'flip note', whereby the notes are initially issued as floating rate notes, which then 'flip' into fixed-rate notes.”
This process is said to involve the direct sale of debt securities by the issuer to investors by way of a placement agent that arranges for the sale between the issuer and investors.
The 180,000-cbm SK Audace and SK Resolute (both built 2017) are on long-term charters to French oil major Total.
Citigroup acted as the sole financial advisor, lead placement agent and sole hedge structuring bank while a Citi affiliate assumed the role of agent and trustee for the transaction. SMBC Nikko Capital Markets acted as the joint placement agent.
Marubeni owns 16 LNG carriers jointly with major LNG shipping companies and considers the sector to offer a stable revenue business model.
“We will continue to contribute to the stable supply of LNG, which has low emission factors compared to other fossil fuels, through its LNG carrier business by utilising a diverse set of funding sources.” Marubeni said.
