Shipping lender Nordea believes a two-tier market for loan pricing is inevitable as green financing becomes ever more important.
The Oslo-listed bank cannot predict when or if owners who are not prepared to sign up for sustainability-linked funding will be unable to access funds.
But Nordea's co-shipping heads — Thor-Erik Bech and Geir Atle Lerkerod — stressed that effective decarbonisation performance will confer an advantage on those companies that do go for green financing.
Lerkerod told TradeWinds: "We have been very active in sustainability loans."
He said that sustainability-linked loans (SLLs) are discussed with all clients.
"We are seeing very good interest," he said. "We expect more loans to be sustainability-linked going forward."
Big deals last year
Bech said the bank led a number of large sustainable loan transactions in 2020, including for tanker owners Euronav and International Seaways.
Euronav raised $713m to fund VLCC purchases, while the bank arranged $340m of refinancing for International Seaways.
Nordea discusses with shipowners how the bank can contribute to positive development when it comes to an increased focus on environmental, social and governance (ESG) issues.
"The companies are really taking this seriously now as well," Bech said. "This is something that has been very high on everyone's agenda."
He added that ESG is an important parameter that factors into which companies get the best terms.
"Whether it's going to exclude people, it's hard to say when that will happen," he said. "But clearly the ones that are best in class are able to attract more banks and more investors, and, through that, they will get more attractive pricing in the market."
Top of the charts
Nordea ranks somewhere between numbers five and 10 globally in terms of shipping lenders' loan volumes, with about $948m on its books.
The bank topped finance platform Dealogic's marine finance rankings for 2020, marking its high activity level in shipping.
Bech said the table shows Nordea as the largest arranger and originator of new transactions as bookrunner.
"Lead arranger has been our role for a very long time," he said.
Nordea also arranged the first sustainability-linked bond (SLB) with Norwegian chemical tanker owner Odfjell earlier this year.
Lerkerod said: "We expect other companies to follow."
No SOFR deals yet
Since Nordea led the way with that $100m deal, Atlas Corp — the parent of boxship giant Seaspan Corp — has followed with a $200m placement managed by DNB Markets and Fearnley Securities.
In February, Norway's Grieg Star secured what is thought to be shipping's first loan under the new secured overnight financing rate (SOFR), which will replace the London inter-bank offered rate (Libor) from 2023.
Domestic bank DNB is providing $12m over five years to refinance the 45,000-dwt open-hatch bulker Star Japan (built 2004).
But Nordea said it has not concluded any such deals for shipping yet.
The bank's fourth-quarter revenue increased to €1.17bn in the fourth quarter, up from €1.1bn a year ago.
Net profit grew to €725m, compared to €612m in 2019.
