Recent tanker sale and purchase activity highlights the importance of the lease finance community in supporting tanker sales for further trading
Although there has not been a large sale and leaseback deal on the scale of the Scorpio Tankers deals over the last few years, Chinese leasing companies continue to play an important role in the tanker sale and purchase market.
During March and April 2019, 76 tankers of all types were sold for further trading, according to VesselsValue. This brings the total number of tankers sold for further trading to 139 by the end of April, approximately 30% higher than in the same period in 2018.
In terms of numbers, the product tanker sector saw the greatest number of tankers changing hands, with 34 vessels sold for further trading, the majority in the MR2 sector.
Of the 21 MR2s sold, half were under the age of 10 years old.
ST Shipping sold a pair of MR2s, Alpine Maria and Alpine Mary, both built in 2014 at the South Korean shipyard SPP for US$27M each to ClearOcean Tankers of Cyprus.
TransPetrol Maritime Services also sold three MR2 tankers with the prefix “Alpine” during the same period.
The trio, Alpine Eternity, Alpine Loyalty and Alpine Venture, were constructed at Hyundai Mipo between 2009 and 2010 and were sold for prices ranging from US$17M to US$18M to Celsius Shipping of Denmark.
Another trio of MR2 tankers, all built at Dae Sun in 2013, were sold by Navios Maritime Acquisition Corp to Avic Leasing in a sale and leaseback deal.
Nave Alderamin, Nave Capella, and Nave Titan form part of a US$103.2M package to refinance US$50.3M outstanding on an existing facility on three product tankers and to finance two product tankers for which their previous credit facility was fully prepaid in March 2019 for $32.2M.
According to Navios Maritime Acquisition Corp, the agreements will be repayable in 28 equal consecutive quarterly instalments of US$2.3M each, with a repurchase obligation of US$39.7M on the last repayment date. The agreements each mature in March and April 2026 and bear interest at LIBOR plus 350 bps per annum.
The MR1 tanker sector also saw a tranche of sale and lease back deals.
ICBC Financial Leasing completed a sale and leaseback deal for four 2015-built MR1 tankers constructed at Hyundai Mipo.
Navig8 Adamite, Navig8 Almandine, Navig8 Amazonite, and Navig8 Amber are IMO 2, 37,000-dwt Interline coated tankers that are commercially operated in the Alta8 Pool, which has 37 MR1s. According to Navig8 Chemical Tanker Inc, the net proceeds from the transaction were US$94.7M.
A portion of the proceeds was used to repay existing loans used to finance the vessels’ newbuilding contracts under the multi-bank loan facility secured by Navig8 Chemical Tanker Inc in 2015.
Under the sale and leaseback agreements, the four tankers were sold and delivered to ICBC and the company has entered into bareboat charters with ICBC for the vessels.
Navig8 Chemical Tanker Inc has purchase options to re-acquire the vessels during the charter period, with the first such option exercisable on the second anniversary of the date of delivery of each vessel to ICBC, and obligations to repurchase the vessels at the end of the charter period.
Both the Navios deal and the Navig8 deal extend the support the Chinese leasing companies are giving the product tanker market, in effect replacing the European banks who had been the main participants in product tanker financing before the Lehmann Brothers financial crisis of 2008.