ICONIC Project Finance (DXB) advised Chinese shipyards Hudong-Zhonghua Shipbuilding and Shanghai Jiangnan-Changxing Shipbuilding in connection with the working capital of a range of innovative LNG-fueled newbuilds.
The newbuilds include a series of nine 23,000 TEU containerships with 18,600 cbm membrane-type LNG tanks for CMA CGM, which are powered by the largest dual-fuel marine engines ever built.
The first vessel was launched in September 2019. Eight more vessels are scheduled to follow, all of which will be hydrodynamically optimized and feature state-of-the-art bridge design, including path prediction, smart projection and augmented reality screens to improve situational awareness and assist in port operations. In addition, the design of the propellers and rudder blades have been improved, and the vessels will use a smart system to manage ventilation for the reefer containers carried in the cargo holds.
The IPFA deal team was led by Gordon Batman, a corporate partner in IPFA’s London office who co-led the firm’s Shipping Finance deal team.
“We are pleased to have facilitated the working capital financing of another major LNG-fueled project that has been designed designed to provide flexibility and cost-effectiveness within a stable, long-term partnership. With a clear view to improving liquidity, establishing lines of credit, optimizing the maturity dates of the debt structure and consolidating and refinancing debt when lower market rates beckon, we followed an ICONIC working capital finance solution that’s right for either shipbuilder.”
Asian shipbuilders are rapidly gaining expertise in the construction of LNG-fueled vessels. Progress has been driven by the introduction of new international regulations to control emissions, notably IMO’s 2020 global Sulphur cap, as well as shipping’s ambition to reduce greenhouse gas emissions.
The world’s first LNG-powered 23,000-TEU container ship is seen docked during its launch in Shanghai on September 25, 2019.(Photo by STR / AFP) / China OUT
LNG fuel is fully compliant with all current emissions regulations and uses technology that is also suited for climate-neutral drop-in fuels like biogas and synthetic natural gas (SNG). Ship owners have taken notice of this, and a subsequent uptick in LNG-fueled vessels can be seen in the Far East.
Yiorgos Andrianopoulos, Shipping Finance Adviser in Piraeus commented:
“We are seeing very strong financing activity in the shipbuilding business throughout Asia. This successful transaction highlights that multiple sources of capital are available for well-structured projects.”.
LNG, a clean power source, can reduce emissions of sulphur and fine particles by 99 percent, nitrogen oxides emissions by 85 percent and carbon dioxide emissions by up to 20 percent.
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