Ireland consolidated its position as a viable alternative ship finance centre with the resounding success of the Inaugural Marine Money Ship Finance & Investment Forum last Wednesday the 31st of October, which was attended by over 120 national & international business executives.
Held in Dublin, the forum was the first time many of the international shipping community got to meet & network with Irish Shipping, banking, legal, financial executives and appreciate the maritime management resources available in Ireland.
The Conference was opened by Mr John Lumsden, Assistant Secretary General & Head of Maritime Transport of the Irish Department Of Transport , who underlined the Governments commitment to developing this segment of the sector. He commented that “Ireland has developed a global reputation across that marketplace for its expertise in major transport modes like aviation, Shipping and ship finance should present at least as exciting an investment opportunity to the country as the other, more established asset-backed investment markets, such as aviation and property.”
The programme & panel of speakers reflected the diverse range of specialist knowledge Ireland can offer in finance & investment for the modern shipping company. With Ireland’s expertise in such fields as Aircraft leasing and Property Investment Funds, delegates gained a real insight on the potential opportunities available for them on the Irish market, an understanding for the Irish investor and the capital reserves Ireland has to offer.
The Irish Maritime Development Office has been working closely with a number of banks and financial institutions in Ireland over the last 3 years to support the development of this high value niche service industry. Speaking at the conference, IMDO Director, Glenn Murphy said “Ireland has already established a track record in asset-backed finance, particularly in the mobile asset market, with Dublin recognised as the leading centre for aviation lease financing in the world. Several leading Irish-based financial institutions are already expanding their portfolios into shipping.
IMDO believes that, based on the similarity of the structuring of these deals (i.e. the involvement of the leading finance/leasing/legal and accounting firms) that Ireland could emulate the level of activity in the aviation sector in 10-15 years’ time and complementing it as a key element of Ireland’s mobile asset finance market.
The conference delegates learnt of the first a bond listing of an overseas shipping group this year, in January Royal Caribbean Cruise Line (The worlds largest) issued a €1.2billion coupon. A representative of BNP-Paribas also advised of the first securitisation deal ever in the shipping market was underwritten and structured in Dublin this year valued at more than €800m.
The conference concluded with an investment announcement which reinforced Irelands growing success in this field, Mark Avery Joint Managing Director of the newly established Chemstar Tankers, a subsidiary of Yardimci Shipping Group informed the audience of the companies plans to source and finance the acquisition of 6 chemical tankers worth €120 million from Ireland. Mr Avery plans to raise money from the Irish Capital Markets and plan to eventually option a dual listing for Chemstar Tankers in Ireland and possibly New York, London or Oslo. The company were expected to also structure its commercial and strategic management operations in Ireland.
For further information, please contact:
Glenn Murphy, IMDO Tel: 00 353 1 4176 6500
Mairead Ni Cheoinin, IMDO Tel: 00 353 1 4176 6500
John Joyce, Marine Institute Tel: 087 2250871 00353 1 417 6500
Background Notes
Ireland and the Shipping Services Sector
IMDO’s prediction of growth in the Ship Finance and Maritime Commerce sector is supported by recent data from the Central Statistics Office (CSO) which shows that, while Ireland was a net importer of commercial ship services in 2001, we are now a net exporter of many of the services we once purchased from abroad, providing a highly significant source of invisible earnings for the exchequer. Centres in London and Singapore contribute more than $2.2 billion per annum in overseas earnings from shipping commerce activity.
Ireland is now positioning itself in the structured finance market, offering leasing arrangements for shipping, something which is new to the sector. Traditionally, most owners have financed their vessels through simple debt/mortgage arrangements, typically in the region of around 70% debt ratio. The loan would normally be repaid based on the vessel’s charter earnings in the market.
More recently, Ireland has become an emerging centre for more structured and complex ship finance deals, with very significant “securitisation” of portfolios being structured in Ireland, with single securitisation deals being structured at an average of $600 million per deal.
Shipping markets are driven by strong global growth, with new deals totalling more than $600 billion in charter earnings being traded on the various shipping markets in 2006. World seaborne trade is obviously a key driver, with China’s entry into the globalised economy also impacting the major rally in markets since 2002—after which earnings have tripled. The average composite charter index of earnings in 2000 was $12,500 per day and today it is $36,000 with large bulk and tanker vessels earning in excess of $100,000 per day.
Most shipping economists are predicting continued strong demand patterns over the next 15-20 years, which are boosted by continued global merchandise and manufacturing trades. Currently the volume of global trade is around 7.1 billion tons , which is expected to double by 2015. All this growth will require more ships, which will require more funds, which require structured locations to prepare and execute these trades. Ireland is well positioned to ride this wave. The Irish Maritime Development Office
The Irish Maritime Development Office, of the Marine Institute, was established by statute in December 1999 as the national agency charged with the responsibility for undertaking the following activities through its statutory remit:
- To advise the Minister on the development and co-ordination of policy in the shipping and shipping services sector.
- To promote and assist the development of Irish shipping and Irish shipping services
- To liaise with, support and market the shipping and shipping services sector,
- To carry out policy as may be specified by the Minister relating to the shipping and shipping services sector and seafarer training.
The Department of Transport assumed responsibility for the Ports and Shipping services sector in January 2006.
Ireland
Ireland has been ranked as the 22nd most competitive economy in the world, unchanged from last year according to the latest Global Competitive Index compiled by the World Economic Forum. the country came first in the world for the dominance of foreign-owned companies, the impact of foreign direct investment rules, and technology transfer through multinational companies. It was ranked fifth in the world for the quality of its primary education system, seventh for the standard higher level education system, eighth for the strength of its accountancy standards, and seventh best in the world for the number of procedures required to start a business.
This year, over 11,000 business leaders were polled in 131 countries for the index