GasLog has clinched what is claimed to be shipping’s biggest-ever commercial debt financing deal.
The Greek owner of 23 LNG carriers and an FSRU has secured a $2.8bn loan package from 14 international banks that is linked to sustainability and gender diversity.
In third-quarter earnings released on Thursday, the company said that the revolving credit facility has a tenor of five years, including two one-year extension options.
Banking sources told TradeWinds that it is priced about two percentage points above SOFR.
The biggest part of the loan, to the tune of $2.1bn, refinances loans secured by GasLog's LNG fleet following the absorption earlier this year of GasLog Partners, a previously stand-alone, publicly held sister entity.
The loan extends GasLog's debt maturity and “simplifies [its] debt structure, providing incremental available liquidity... while reducing cost and debt service requirements,” the company said.
GasLog had $2.9bn worth bonds and loans outstanding as of 30 September. In 2022, its debt carried an average weighted interest rate of about 4.3%.
Rising interest rates on that debt have been a drag on earnings.
The company revealed on Thursday that net income in the third quarter dropped to $46.5m from $109.1m in the same period last year. About $17m of the profit reduction was due to rising finance costs.
A new type of KPIs
The financing comes with key performance indicators tied to carbon emissions and female representation in the company’s cadetship programme, said law firm Norton Rose Fulbright (NRF), which advised global co-ordinator lenders Citibank and BNP Paribas.
Norway’s DNB Bank acted as agent, while Dutch lender ABN AMRO took on the role of sustainability co-ordinator.
“DNB was delighted to assist GasLog in this transaction, which is a landmark both in size and structure,” the lender’s head of global shipping, Christos Tsakonas told TradeWinds.
“It is a testament to the strength of GasLog, its management and its sponsors,” he added.
NRF said gender diversity-linked loans are still a fairly new development in shipping.
Earlier this year, the law firm advised ABN AMRO on one of the industry’s first gender diversity-linked loans to US-listed LPG carrier owner Navigator Holdings to refinance 10 vessels.
The legal team for the GasLog deal was led by NFR’s Greece head, Yianni Cheilas.
“We are delighted to have been able to support our clients with this $2.8bn facility, which appears to be the largest ever commercial debt financing recorded in the global shipping space,” Cheilas said.
Trend of banks returning to shipping
“The deal highlights the growing importance of ESG-linked transactions within the industry and features a novel gender diversity initiative.”
Cheilas called the deal transformative for GasLog, reinforcing the trend of a significant return of large-scale commercial bank debt in shipping in the past couple of years, especially for prime global operators.
One industry source told TradeWinds that Athens’ Alpha Bank chipped in about $250m in the package — a surprisingly large amount for the Greek lender.
That explains why the share of Alpha Bank’s LNG-related loans to its total shipping portfolio of €3.1bn ($3.36bn) jumped from 6% to 13% this year, as TradeWinds reported earlier this week.
According to Cheilas, the deal “is also indicative of the favourable LNG market outlook, despite turbulent times and geopolitical crises, with new regions expected to add to the demand for LNG vessels as the global LNG supply continues to grow”.
ABN AMRO’s Anastassia Tcherneva, head of shipping clients, and Georgios Arcadis, country head in Greece, said the lender was very proud to support GasLog in “this cornerstone transaction.”
“The syndicated facility is a landmark blanket facility in terms of size,” they added.
The bankers said that the transaction “manifests ABN AMRO’s strategy to enhance the sustainable transition of our clients.”
“The relationship with GasLog and Mr Peter Livanos dates to the 1980s. We are honored to be the sustainability agent for this deal and look forward to replicating the initiative in more transactions,” they added.
Earlier this year, NRF advised the creditors of GasLog and spin-off GasLog Partners on the parent’s move to take its subsidiary private.
In 2021, it advised GasLog’s commercial lenders and export credit agencies during the $4.6bn merger with US investment giant BlackRock.
The year before that, GasLog and GasLog Partners refinanced nearly all of the debt falling due in 2021, taking out three loans totalling $1bn.
