Finnvera participates in an extensive financing project related to the building of two large cruise ships in Germany. Genting Hong Kong Limited, a company based in Hong Kong, has commissioned the building of two large cruise ships at the MV Werften shipyard. The ships are scheduled for completion in 2021 and 2022, respectively. The goods and services for the ships provided by 16 Finnish suppliers total more than 500 million euros in value.
The complete financing package for the ships will be provided by six international banks, and the guarantors are one of the states of Germany, the German export credit agency Euler Hermes, and the Finnish export credit agency Finnvera.
The shipbuilding projects and shipyard investments of MV Werften total approximately 3.1 billion euros. In order to finance these investments, a financing package of 2.6 billion euros has been arranged under the auspices of the German bank KfW IPEX. Of this amount, the share covered by Finnvera totals 365 million euros. The financing negotiations started in 2016, which illustrates the long-term basis of large-scale orders and export transactions.
“Finnvera has a positive attitude towards the project right from the start, and we have maintained close dialogue with the shipping company, shipyard and bank all along. This contributed to Finnish suppliers and subcontractors winning the export transactions, instead of the shipping company and shipyard purchasing the required services from suppliers in competing countries,” Jussi Haarasilta, Finnvera’s Executive Vice President, says.
Shipping companies’ investment boom manifests as shipyard capacity being booked for years to come
The world’s largest cruise shipping companies are undergoing a boom of investments in order to increase their vessel capacity, and this manifests as the shipyard capacity being booked for years to come. This can be seen in Finland, which is one of the few countries in the world that has the capability to build the most demanding cruise ships. The ship investment boom also provides considerable volumes of work for Finnish subcontractors, and the entire shipyard cluster has been proven to bring significant added value for the Finnish national economy.
This was also reflected in the financing granted by Finnvera at the beginning of the year. In January–June, Finnvera granted more export credit guarantees and special guarantees than in the corresponding period last year, and the trend-like growth of demand for new guarantees continued. Demand for export credits also increased, although the volume of new credits granted during the first half of the year decreased year on year. The financing granted concentrated on the ship and shipyard sector as well as telecommunications and pulp and paper.
The growing importance of financing arrangements offered to the buyer is also an international trend.
“In the case of Genting, for example, the financing arrangement supports the financing of trade between several Finnish exporters and their clients. Arrangements like this are an international trend: the export credit agency of the exporting country or a corresponding provider of financing offers financing to the buyer, but receiving financing is contingent on the purchases targeting the country in which the said export credit agency is based. This is a way of securing the national interest, which is also an important criterion in the financing granted by Finnvera,” Haarasilta says.
Currently, order books in the shipyard sector are full globally. Genting Hong Kong purchased MV Werften’s shipyards three years ago in order to ensure that the company’s own new ships would be completed on schedule. The shipping company’s Global Class ships are the largest cruise ships built in Germany and have the world’s largest passenger capacity.
Jussi Haarasilta, Executive Vice President, Finnvera, tel. +358 029 460 2601
Buyer, builder and borrower: MV Werften Wismar GmbH and Genting Hong Kong Limited and it’s Dream Cruises brand
Guarantee holder: KfW IPEX
Name of the MLA banks: KfW IPEX, BNP Paribas, Citibank, Crédit Agricole, Credit Suisse, DNB
Supplier: several Finnish suppliers
Goods/ project: Maritime industry design works, services and goods to be installed into the cruise vessels. Pre-delivery financing for purchasing the goods and services from the Finnish suppliers to Global Class I and Global Class II cruise vessels.
Total credit facility amount: over EUR 2.5 billion
Credit facility amount covered by Finnvera: EUR 365 million
Pre-delivery credit period: Below 3 years
Percentage of cover: 80 %
Date of publish: 29 August 2019