Booming business for global container lines and strong growth in the liquefied natural gas sector are leading to big orders at Chinese and South Korean shipyards. Containership orders for the fourth quarter of 2020 were dominated by so-called megamax vessels with capacity of over 18,000 TEUs.
There is also strong demand for medium-sized neo-Panamaxes, which carry between 12,000 and 16,000 TEUs, and are the biggest ships that can move through the new locks on the Panama Canal.
On July 2 KfW IPEX-Bank and BNP Paribas announced the signing of a green loan for German container line Hapag-Lloyd to finance the construction of six large container vessels by Daewoo Shipbuilding & Marine Engineering in South Korea.
Together with nine other banks, KfW IPEX-Bank is contributing debt capital of US$852 million. KfW IPEX-Bank and BNP Paribas acted as global coordinators and green loan arrangers. Also in the lending consortium are Bank of America, Citi, SMBC, Deutsche Bank, DZ Bank, ING Bank, Societe Generale and UniCredit Bank.
The 12 year loan (from date of delivery) is backed by Korea Trade Insurance Corporation (K-Sure). Hogen Lovells represented Hapag-Lloyd, while Watson Farley & Williams advised KfW IPEX-Bank and BNP Paribas.
Green loan
The financing provided by a consortium led by KfW IPEX-Bank and BNP Paribas is enabling Hamburg-based Hapag-Lloyd to modernize its fleet of around 240 operated ships. The transaction was completed in compliance with the Green Loan Principles of the Loan Market Association and simultaneously verified by an independent expert in the form of a secondary party opinion from DNV.
The six 23,500 TEU vessels are scheduled for delivery starting 2024 and are dual-fuel ships able to run on liquefied natural gas (LNG).
“With this financing, we are helping our long-standing customer Hapag-Lloyd with its transition to ‘green’ shipping,” says Andreas Ufer, a member of the KfW IPEX-Bank management board. “A green loan was possible because Hapag-Lloyd is using the loan funds exclusively for the project, which has been clearly defined by set criteria – operating the ships with LNG will significantly reduce carbon emissions, marking a clear improvement on the current standard.”
In February KfW IPEX and BNP Paribas signed a US$417 million green loan backed by K-Sure with Hapag Lloyd to finance three ultra-large 23,500 container ships. This was part of a larger order from Hapag-Lloyd for six newbuilding containerships for delivery between April and December 2023 at a total cost of US$1 billion. The second batch of three containerships was financed via a US$472 million sale and leaseback transaction with ICBC Financial Leasing.
Shift to LNG
Mediterranean Shipping Company (MSC), the world's largest container line behind Maersk, also has a huge order book at Asian yards. This includes 40 conventionally fueled ultra-large ships being built at Yangzijiang, some of which MSC would like to convert to be able to run on LNG.
In January MSC signed orders with Yangzijiang for two 24,000 TEU vessels, much larger than the ships traditionally built at the yard. Around the same time China State Shipbuilding Corporation (CSSC) announced that affiliated yards Jiangnan Shipyard and Hudong-Zhonghua Shipbuilding signed orders for four 24,000 TEU vessels with Bank of Communications Financial Leasing (Bocomm Leasing). These will be chartered to MSC.
In addition to building larger container ships, Chinese yards are also focusing on winning orders for LNG Floating Regasification and Storage Units (FRSUs) to serve the boomng global market in LNG power generation.
The first FRSU ever built at a Chinese yard was recently completed, for delivery to Greek operator Dynagas. The 174,000 cubic metre Transgas Power vessel was built by Hudong Zhonghua Shipbuiding, a CSSC subsidiary. A naming ceremony took place in Shanghai on June 28. Work is expected to be completed on a sister vessel, Transgas Force, by the end of the year.
