The Export-Import Bank of Korea (www.koreaexim.go.kr, Kim Yong-hwan, “Korea Eximbank”) announced on December 25 that the Bank will provide USD 340 million in ship financing (a USD 240 million Direct Loan* and a USD 100 million Comprehensive Guarantee**) to Swedish maritime group Stena, which ordered special-purpose ships from Korean shipbuilders.

*Direct Loan: long-term loan provided by Korea Eximbank to foreign buyers to finance their purchase of Korean products.
** Comprehensive Guarantee: financial instrument designed to get commercial banks to participate in lending to a foreign ship buyer by guaranteeing the buyer’s repayment.

The USD 100 million Comprehensive Guarantee, in particular, was provided as a means to involve Korea Exchange Bank in the global ship financing deal.

Korea Exchange Bank had already made ship finance loans backed by Korea Eximbank’s Comprehensive Guarantee, providing USD 70 million to Chile’s CSAV in August and USD 130 million to Canada’s Teekay in November, and is well on its way to establishing itself as a global ship financier.

Stena has awarded orders for two semi-submersible drilling rigs* worth USD 1.4 billion to Samsung Heavy Industries in June and sought Korea Eximbank’s financing for the deal.

Stena is a Swedish maritime group owned by the Olsson family with operations in various fields including passenger ferries, offshore drilling, and freighting.

* Semi-submersible drilling rig: high value-added floating vessel which drills for deepwater oil utilizing advanced equipment such as the Dynamic Positioning System.

A Korea Eximbank official said, “Stena retains a cancellation option for one of the two drill ships which is effective until the end of 2013, and we moved quickly to secure that portion of the contract for Samsung Heavy Industries with our customized financing.”

Cooperation among domestic and foreign ECAs played a conspicuous role in the financing of the contract.

Alongside Korea Eximbank, Korea Trade Insurance Corporation (K-Sure) provided USD 340 million in export insurance and Norwegian ECA GIEK provided USD 250 million in export guarantee for the semi-submersible drilling rigs project.

Korea Eximbank and K-Sure had also teamed up on December 17, each committing USD 130 million in ship financing to Greek shipping company Enesel which ordered five container ships from Hyundai Heavy Industries for USD 540 million.

Enesel is a prime client of Korean shipyards whose entire fleet consists of Korean-made vessels and who has ordered 14 large container ships from Hyundai Heavy Industries in 2012.