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CMB Financial Leasing signs leaseback deal with Star Bulk Carriers
This latest sale and leaseback transaction, valued at US$180.4 million, show that Chinese finance continues to take centre stage in the global ship leasing market
Michael Marray 15 Aug 2018

CMB Financial Leasing (CMBFL) has signed a US$180.4 million sale and leaseback transaction with Star Bulk Carriers Corp, a Nasdaq listed global shipping company specialising in dry bulk cargoes.

The funds obtained by Star Bulk under a five-year lease agreement are being used to part finance the cash portion of Star Bulk's acquisition of 15 dry bulk vessels from Norwegian shipowner Songa Bulk ASA.

Founded in 2008, Shanghai-based CMBFL provides financial leasing solutions to large, medium, and small businesses across China. It is a subsidiary of China Merchants Bank. CMBFL was advised by law firm Watson Farley & Williams (WFW).

"This transaction shows once again how Chinese leasing companies are working closely together with international ship owners to fulfil their financing needs," comments WFW partner, Christoforos Bisbikos, who led the Hong Kong Maritime team advising on the transaction.

Chinese banks continue to dominate the global ship leasing market, taking on deals on a scale beyond the reach of most European and US lessors.

In May this year, ICBC Financial Leasing and China Merchants Energy Shipping formed a partnership to build six very large ore carriers (VLOCs) for more than US$400 million

ICBC Leasing and China Merchants Energy Shipping held a signing ceremony for a cooperation agreement on a VLOC project, tightening their overall collaboration in the shipping industry with a framework agreement at the same time.

Under the terms of the agreement signed in Beijing, the energy transportation unit of China Merchants Group joins the VLOC project of ICBC Leasing via an offshore investment vehicle. The cooperation with China Merchants reduces operational risks and produces benefits utilising both companies' expertise in maritime management.

Such deals fit in well with the goals of the Belt & Road Initiative, not only supporting domestic shipyards but also playing an important role in the transportation of a strategic resource to China. Back in 2016, ICBC Leasing and Vale of Brazil signed a 27-year ore transport agreement. As part of that deal, ICBC ordered a fleet of ore carriers to be built by units of China Shipbuilding Industry Corporation and Yangzijiang Shipbuilding. The six new ore carriers ordered by ICBC and CME will also transport ore produced by Vale.

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