SMM

SMM: CLSA thinks that the standstill agreement with North Atlantic Drilling was a surprise, given that the rig was scheduled for delivery in 1Q15.

It highlights that Sembcorp marine’s willingness to be a joint asset owner of the rig reflects the reality that in such climate, yards rather be asset owners and hope for a recovery in chartering rates, than opting for a distressed sale route.

Nevertheless, the house highlights in both scenarios, yards are the bigger loser, because they already financed a sizeable portion of the rig construction.

The house maintains a conviction sell on sembcorp marine with TP of $1.77.

Separately, Sembcorp marine bought 60,000 shares yesterday at $1.904.