Nakilat has said it planned to borrow up to $4.3bn to buy 16 tankers to transport liquefied natural gas.
The tankers are due for delivery in 2008 and 2009, Nakilat said. The company would raise the money from several sources, a statement on the Doha Securities Market website said.
Nakilat had announced in September that it had placed a $3bn order for LNG carriers with South Korean firms Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries.
Meanwhile, Fitch Ratings has assigned Nakilat’s upcoming issues of senior secured bonds an ‘A+’ rating and subordinated second priority secured bonds a ‘A-’ (A minus) rating.
Nakilat owns equity interests in 29 LNG vessels chartered to Qatari projects.
The bonds are part of a debt programme to finance 90% of the delivered costs of 16 large LNG carriers to be built in Korea and chartered to upstream LNG projects in Qatar.
The bond proceeds will be on-lent to Nakilat’ 16 ship-owning companies, each of which guarantees the group’ debt.
The ratings reflect the importance of the ships financed by this programme for the Qatari government, their critical role in delivering gas to offshore markets and the importance of LNG to the Qatari economy.
The ratings also take into account the stable cash flow stream provided by the long-term charter agreements with four LNG projects, the strength of the charterers, the high priority position of charter payments in the charterers’ cash waterfalls and the transaction’s structure and security package.
By 2011, the four LNG ventures, which will rely on Nakilat to transport their gas, are expected to account for 60% of Qatar’s LNG production, while LNG’s contribution to the Qatari economy is expected to overtake oil revenues to account for about 25% of the GDP.
Construction risk is mitigated by fixed-price, date-certain construction contracts with experienced shipyards, backstopped by refund guarantees provided by creditworthy guarantors.
The ships will be chartered under 25-year time-charter contracts to LNG ventures in Qatar. The bonds fully repay during the charter period.
All the charterers benefit from strong sponsors and low production costs. Each charterer has raised non-recourse debt, but the charter payments made to Nakilat rank ahead of debt service, shareholder distribution and, in some cases, other operating expenses, in the waterfall.
These projects are currently building their LNG production facilities and could experience production delays or shortfalls, especially during the early years.
Fitch views that, given the limited shipyard capacity for new-build tankers, the charter payments will be met even if the utilisation rate of Nakilat’s fleet is lower than expected in the early years (charter payments are not dependent on the utilisation rate).
The ships will be operated under a long-term operating and management arrangement with a newly formed Qatari shipping company and Shell International Trading and Shipping Company, a highly experienced ship manager.
Fitch tested the impact of various operating and financial risks, and the results demonstrated that both the senior and subordinated bonds could be repaid in all the scenarios tested.
The terms of the financing include standard project finance covenants, including limitations on the debt raised to fund the remaining 11 ships.
The tankers are due for delivery in 2008 and 2009, Nakilat said. The company would raise the money from several sources, a statement on the Doha Securities Market website said.
Nakilat had announced in September that it had placed a $3bn order for LNG carriers with South Korean firms Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries.
Meanwhile, Fitch Ratings has assigned Nakilat’s upcoming issues of senior secured bonds an ‘A+’ rating and subordinated second priority secured bonds a ‘A-’ (A minus) rating.
Nakilat owns equity interests in 29 LNG vessels chartered to Qatari projects.
The bonds are part of a debt programme to finance 90% of the delivered costs of 16 large LNG carriers to be built in Korea and chartered to upstream LNG projects in Qatar.
The bond proceeds will be on-lent to Nakilat’ 16 ship-owning companies, each of which guarantees the group’ debt.
The ratings reflect the importance of the ships financed by this programme for the Qatari government, their critical role in delivering gas to offshore markets and the importance of LNG to the Qatari economy.
The ratings also take into account the stable cash flow stream provided by the long-term charter agreements with four LNG projects, the strength of the charterers, the high priority position of charter payments in the charterers’ cash waterfalls and the transaction’s structure and security package.
By 2011, the four LNG ventures, which will rely on Nakilat to transport their gas, are expected to account for 60% of Qatar’s LNG production, while LNG’s contribution to the Qatari economy is expected to overtake oil revenues to account for about 25% of the GDP.
Construction risk is mitigated by fixed-price, date-certain construction contracts with experienced shipyards, backstopped by refund guarantees provided by creditworthy guarantors.
The ships will be chartered under 25-year time-charter contracts to LNG ventures in Qatar. The bonds fully repay during the charter period.
All the charterers benefit from strong sponsors and low production costs. Each charterer has raised non-recourse debt, but the charter payments made to Nakilat rank ahead of debt service, shareholder distribution and, in some cases, other operating expenses, in the waterfall.
These projects are currently building their LNG production facilities and could experience production delays or shortfalls, especially during the early years.
Fitch views that, given the limited shipyard capacity for new-build tankers, the charter payments will be met even if the utilisation rate of Nakilat’s fleet is lower than expected in the early years (charter payments are not dependent on the utilisation rate).
The ships will be operated under a long-term operating and management arrangement with a newly formed Qatari shipping company and Shell International Trading and Shipping Company, a highly experienced ship manager.
Fitch tested the impact of various operating and financial risks, and the results demonstrated that both the senior and subordinated bonds could be repaid in all the scenarios tested.
The terms of the financing include standard project finance covenants, including limitations on the debt raised to fund the remaining 11 ships.