ICBC Leasing signs green finance deal on Hapag-Lloyd containerships
German company orders six 23,500+ TEU vessels from Daewoo Shipbuilding
24 Feb 2021 | Michael Marray

Industrial and Commercial Bank of China Leasing (ICBC Leasing) has signed a sale and leaseback transaction for three ultra-large containerships being built in South Korea for Hapag-Lloyd.

Last December Hamburg-based Hapag-Lloyd signed an order for a total of six 23,500+ TEU (twenty-foot equivalent unit) vessels with Daewoo Shipbuilding & Marine Engineering, which will deliver them between April and December 2023.

Three vessels with an order value of US$472 million are being financed by ICBC Leasing. The transaction has a maturity of 17 years plus construction-phase financing, and conforms to the Green Loan Principles.

KfW IPEX Bank and BNP Paribas have signed a green loan for the other three vessels, with an order value of US$417 million. This loan was structured and coordinated by KfW IPEX-Bank and BNP Paribas acting jointly as global coordinators and as green finance coordinators. Under a syndication arrangement, the two banks included nine other international banks in the financing.

The six vessels will be fitted with state-of-the-art high pressure dual fuel engines. The engines will operate on LNG, but have sufficient alternative tank capacity to operate on conventional fuel. Given their extremely efficient engines, the vessels will generate approximately 15% to 25% CO2 savings compared to traditional ships.

Green loan

The 12-year loan led by KfW IPEX and BNP Paribas fulfils the Loan Market Association's Green Loan Principles as confirmed in an expert opinion by DNV GL, and is secured via cover from Korea Trade Insurance Corporation (K-SURE).

German-Norwegian company DNV GL is an external reviewer giving a secondary-party opinion on the deal conforming with the Green Loan Principles.

The GLP were originally published by the London based Loan Market Association in 2018, and new guidance documents were released in May 2020.

Green loans are any type of loan instrument made available exclusively to finance or re-finance, in whole or in part, new and/ or existing eligible green projects.

"For us, this project marks a further step towards making shipping more sustainable," comments  Andreas Ufer, a member of the management board responsible for maritime industries at KfW IPEX-Bank. "The support of the participating banks for sustainability in shipping is further amplified by the establishment of the Green Loan Principles."

He notes that two members of the German Maritime Export Initiative (GeMaX) are involved in the project and financing. MAN Energy Solutions is supplying the engines, and DNV GL acting as GLP opinion provider.

Cleaner oceans

“Supporting the transition towards cleaner oceans and accelerating decarbonization across the shipping sector is vital to meet the goals of the Paris Agreement," says Cecile Moitry, BNP Paribas co-head of sustainable finance markets, adding that the Green Loan for Hapag Lloyd sets a progressive industry benchmark.

The vessels will be deployed on the Europe-Far East routes as part of THE Alliance, one of the major container ship alliances which also includes Taiwan-based Yang Ming and Singapore-based Ocean Express One. South Korean container line Hyundai Merchant Marine will be joining in April.

"With the investment in six ultra-large container vessels, we will not only be able to reduce slot costs and improve our competitiveness on the Europe-Far East trade, but also take a significant step forward in modernizing our fleet," says Rolf Habben Jansen, chief executive officer of Hapag-Lloyd, when placing the order in December.

Hapag-Lloyd has a fleet of 234 container ships. Members of THE Alliance are making plans to reshuffle their Asia-North Europe and Asia-Mediterranean networks in preparation for the participation of Hyundai Merchant Marine.

Oslo-based assurance and risk management company DNV GL will change its name to DNV on March 1. The present name has been in place since the 2013 merger between DNV (Det Norske Veritas) and GL (Germanischer Lloyd). 

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