As many as 70 accounts participated in the transaction led by HSBC and Morgan Stanley, which saw a geographic split of 38% to Asia, 37% to the US, and 25% to Europe. Asset managers bought 46% of the bonds, banks 24%, insurance and pension funds 23% and others 7%. Market observers believe the amount bought by insurance and pension funds is exceptionally high for a BBB credit, since such buyers usually represent the most conservative end of the market.
In terms of comparables, investors were quoted WanhaiÆs 2015s which were trading at 114bp over Libor. Additionally, IRPCÆs 2017s were trading last night at 98bp over Libor. Wanhai was put on negative watch during the roadshow and rode out of 25bp, demonstrating the volatile backdrop of the transaction.
ôDespite market volatility, we havenÆt seen a significant widening of spreads in Asia. ThereÆs still a lot of liquidity, but we are being more selective about the deals we buy," says one source. "This was an asset investors wanted to own, and the pricing was attractive for a triple-B credit.ö
The 70-year history of the company is thought to have weighed heavily with investors, who gave great credence to BWÆs management. "The lack of transparency associated with a private company is the biggest issue I have with this credit, as well as the fact that this debt will be subordinated to the issuers' listed subsidiaries. Otherwise, its strong track record and diversification strategy into different shipping markets (LPG, LNG, oil, offshore storage) as well as what seems like a decent management team make this an attractive credit."
Nonetheless, BW is leverage-heavy, with a gross debt-to-Ebitda of 3.8 times in the first quarter of this year, total debt of 4% and an Ebitda coverage of 5.3%, but says Moody's: "BW has good financial flexibility including minimal near-term debt repayment, undrawn credit facilities of $1 billion and a significant portion of unencumbered assets. Secured debt represented only 9% of total tangible consolidated assets as of December 2006."
The BW Group is one of the biggest shipping groups in the world and comprises BW Gas, BW Tankers, BW Dry Bulk and BW Offshore. BW Gas was listed in Oslo in October 2005 as a pure gas shipping company with the BW Group retaining a majority share. BW Offshore followed suit by being listed in May 2006. The other assets remain in private ownership.
The company employs 300 people in the BW Gas and BW Offshore businesses in Oslo and 110 people at the BW Shipping Managers office in Singapore. Total staff, including seafarers, number over 3,000.