Tuesday, March 31, 2015


SG O&M: According to industry newswire Upstream, Brazil’s National Development Bank (BNDES) recently indicated that it does not intend to take the anchor role in the long-term debt financing arrangement for Brazil’s US$25b rig building programme, and has stepped backed from the role of guarantor.

BNDES instead prefers to provide financing via other lenders, rather than directly to Sete Brasil, and will leave it to banks to implement their own risk/credit measures. Yet, without BNDES guarantees, market watchers are uncertain how far lenders will be willing to support the rig building programme.

Meanwhile, shipyards are anxiously awaiting the negotiations of two state-owned banks, Banco do Brasil and Caixa Economica, over a bridging loan due to mature on 17 Apr.

The above news comes as another major setback for Singapore-listed rigbuilders, particularly with Sembcorp Marine (SMM) after one of its agents, Guilherme Esteves de Jesus, who was involved in several Brazilian rig contract awards, was arrested on bribery charges.

While both SMM and Keppel Corp has denied any involvement or wrongdoings in the corruption cases, Maybank-KE reckons that a write-down for the shipyards may be inevitable.

Currently, SMM is building seven drillships worth US$5.6b for Sete Brasil, and have invested close to US$1b in a new yard in Brazil, while Keppel Corp has six submersible orders worth US$4.9b under construction.

Maybank-KE maintain its Sell rating on SMM (TP $2.65) and Hold on Keppel Corp (TP $8.60).

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