Bank Of America Merrill News

Geneva-headquartered energy and commodities trader Vitol has signed an US$8bn loan refinancing of credit facilities agreed in October 2016, the company announced on Wednesday. The revolving credit facility, which is used for working capital and general corporate purposes, comprises a three-year tranche and a 364-day tranche. The three-year tranche totals over US$7bn. ABN AMRO Bank, Commerzbank, Credit Agricole CIB, HSBC Bank and ING Bank were active bookrunners on the transaction. Bank of America Merrill Lynch, MUFG, BNP Paribas, Citigroup, Credit Suisse, DBS Bank, Deutsche Bank, JP Morgan, Lloyds Bank, Mizuho Bank, Natixis, Rabobank, Societe Generale, Standard Chartered Bank, SMBC and UniCredit Bank were mandated lead arrangers and bookrunners.

What a difference a year makes. Twelve months ago, the mood of the Russian delegation at the World Economic Forum in Davos was distinctly gloomy, with oil prices near 12-year lows below $30 per barrel and Western sanctions depressing their economy and financial markets. Since then, however, Russian stock and bond markets have risen about 50 percent, boosted by rebounding oil and - more recently - expectations the new U.S. presidency of Donald Trump will ease the sanctions imposed over Moscow's actions in Ukraine. Russian officials and company executives at the forum attended by the world's political and business elites in the Swiss Alps this week were far more bullish, with many predicting the markets rally would continue this year.

Royal Bank of Scotland is close to selling at least $600 million worth of shipping loans from its portfolio, two sources familiar with the matter told Reuters. RBS, which is more than 70 percent state-owned, is still in the throes of a restructuring, which includes asset sales, job cuts and tackling multi-billion dollar charges to settle litigation and pay regulatory fines for past misconduct. The sources said buyers of the various shipping loan tranches included Japanese financial services firm Orix Corp , Germany's Berenberg Bank, Bank of America Merrill Lynch and asset manager Davidson Kempner. Bank of America and Berenberg declined to comment. Orix could not be reached for comment. Davidson Kempner and RBS declined to comment.

Off the coast of a nearly deserted island below the southern tip of Hong Kong, at least 10 massive ships that normally carry hundreds of thousands of tons of coal or iron ore lie idle near one of the world's busiest sea routes. These empty vessels paint a grim picture for the dry bulk shipping business that veterans of the industry say is grappling with an unprecedented crisis of too many ships and not enough cargoes. The hollow boats underscore the global economic doldrums that policymakers are struggling to overcome. "This is the worst we have seen in recent times. We have been hit by a perfect storm - huge order books, China slowdown…

The number of oil rigs in the United fell for a ninth straight week to the lowest level since December 2009, data showed on Friday, as energy firms continued to cut spending amid the collapse in crude prices. Drillers cut 26 rigs in the week ended Feb. 19, bringing the total rig oil count to 413, oil services company Baker Hughes Inc said in its closely followed report. The number of oil rigs in operation were less than a third of the 1,536 in service during the same week a year ago. Oil has shed 70 percent from highs above $100 a barrel in a selloff that has seen little pause over the past 20 months, forcing a collapse in the rig count as well. Since last Friday though, some traders believed the market had seen a bottom on talk that OPEC was on a plan to reign in production.

When U.S. investment bank Goldman Sachs said last year that oil could fall as low as $20 per barrel, it assigned a fairly low probability to that scenario. Fast-forward five months and in some parts of the world the forecast has already proved correct. Canadian physical crude has been selling this week at below $20 per barrel, less than it costs to extract and transport. Traders in the options market, meanwhile, are taking protection against prices falling below $25. The developments reflect growing concerns that a market already awash in too much oil is now suffering the double-whammy of a sharp slowdown in U.S. and Chinese demand.

Marine transportation service company American Commercial Lines (ACL) announced it has acquired commercial inland barge company AEP River Operations from American Electric Power (AEP). AEP River Operations is based in Chesterfield, Mo., with operations in Paducah, Ky.; and Convent, Algiers and Belle Chasse, La., and delivers approximately 45 million tons of products annually. Mark Knoy, president and CEO of Jeffersonville, Ind. based ACL, had previously run AEP River Operations for a decade before joining ACL in 2011.

US crude fell to a more than six-year low this week, clouding the picture for a high-yield energy sector that already faces a significant cull when credit lines are reevaluated in autumn. Lower-quality names, especially in exploration and production, are already struggling to stay afloat, and with crude dipping below US$38 per barrel, a bad scenario has got worse. According to CreditSights, E&P companies typically obtain credit lines worth around 55%-65% of the estimated value of their reserves, which is redetermined by banks semi-annually. Since the last one in spring, US crude prices have fallen by nearly a third - meaning many companies now face steep cuts to the amount they can borrow. Many are likely to default, and some could well go under.

A recovery in LatAm debt spreads opened a window for Colombia's Ecopetrol on Tuesday when it printed a US$1.5bn 11-year bond - the state-owned oil company's first debt issue in nine months. Optimism over Greek debt talks spurred risk buying on Tuesday, leaving LatAm debt spreads tightening against a weaker US Treasury market, and also benefiting the oil credit that has received a battering in secondary this year. "We are trading well today and are tighter across most credit spreads," said a New York based trader focused on Latin American credits. Even with Heinz's jumbo US$10bn multi-tranche deal in the US high-grade market, Ecopetrol came on a relatively quiet day in the primary market, leaving the runway open for the Colombian borrower.

The U.S. Congress could lift the 40-year old ban on domestic crude oil exports within a year as a drop in gasoline prices and the potential return of Iranian oil to global markets makes it an easier measure for politicians to support, Bank of America Merrill Lynch analysts said on Thursday. U.S. gasoline prices have dropped since last year along with global crude prices, thanks to strong crude output from the United States, Saudi Arabia and Iraq. On Thursday, the U.S. average for regular gasoline at the pump was nearly $2.74 a gallon, down from $3.65 a year ago, according to the AAA motorist club. If that remains the case, it has the potential to allay politicians' fears that they could be blamed any rise in gasoline prices if the crude oil export ban was lifted.

Moody's shocked bond investors this week with a surprise two-notch downgrade that put Brazilian oil company Petrobras in junk territory. The move was seen by some investors as overly assertive, leaving them to add exposure incrementally. "It was aggressive," said Jack Deino, head of emerging market portfolio management and senior portfolio manager at Invesco. "It just reflects the rating agencies' proclivity to shoot from the hip. In late January, Moody's demoted the company to Baa3 from Baa2, warning more ratings actions were on the horizon if the company failed to release audited results. It stuck to its word, exceeding expectation with a cut to Ba2 late on Tuesday. So far, the massive wave of forced selling out of high-grade account portfolios has yet to truly transpire.

Gazprom held the 10th annual Investor Day for the first time in the Asia-Pacific Region – in Hong Kong (February 3) and Singapore (February 5). Taking part in the events were Andrey Kruglov and Alexander Medvedev, Deputy Chairmen of the Gazprom Management Committee; Dmitry Lyugai and Vsevolod Cherepanov, Members of the Gazprom Management Committee as well as heads of the Company’s specialized structural units and subsidiaries. The events were met with great interest by the investment community. In Hong Kong the Investor Day was attended by over 110 portfolio managers and analysts from major international investment funds and credit institutions. In Singapore it attracted more than 120 visitors.

Traders in the Brent oil market have started to use a word that was almost forgotten in the last four years - "contango" in industry jargon, which could also be described as "music to the ears of sellers". The market has not seen a prolonged contango time structure - with front prices lower than future prices - since at least 2010. Back then, oil traders racked up hundreds of millions of dollars by storing fully loaded cargoes at sea. With each week and month that the oil was in storage, it gained in price. The opposite time structure - backwardation - then prevailed, up until this week when it reversed back to contango. This led some analysts to predict a repeat of the 2008-2009 bonanza. Bank of America Merrill Lynch said it even saw a "super-contango" returning.

POSH prices IPO at S$1.15 per share, near bottom of indicative range. POSH focuses on service to production, maintenance and is keen on growing offshore accommodation business. PACC Offshore Services Holdings (POSH) could raise at least S$388.27 million ($311 million) after pricing its initial public offering near the bottom of the pricing range indicated earlier, the company said on Thursday. The deal comes as Singapore's IPO market has struggled in recent years. Most big-ticket listings in Asia opt for Hong Kong where there is more robust demand from Chinese and international investors. POSH priced the deal at S$1.15 a share against an indicative price range of S$1.13 to S$1.24 a share, it said in its prospectus.

PACC Offshore Services Holdings (POSH) could raise at least S$388.27 million ($311 million) after pricing its initial public offering near the bottom of the pricing range indicated earlier, two sources with knowledge of the matter said. Underwriters have recommended POSH to price the deal at S$1.15 a share against an indicative price range of S$1.13 to S$1.24 a share, the sources said. The company is selling 337.625 million shares excluding the greenshoe option. The final price needs to be approved by the company or the company's board, the sources added. The sources declined to be named, while the company was not immediately available for a comment.

This would be only the second mainboard IPO in Singapore this year. Singapore's IPO market lacklustre in recent years, but oil and gas related offerings find favour in Singapore. A major operator of maritime support vessels controlled by Malaysia's richest man is seeking up to $380 million in a Singapore IPO - a boost to the city-state's stock market which has seen just one other mainboard listing this year. The deal from PACC Offshore Services Holdings (POSH), the largest Asia-based international operator of support vessels for offshore oilfields, comes as Singapore's IPO market has struggled in recent years. Most big-ticket listings in Asia opt for Hong Kong where there is more robust demand from Chinese and international investors.

PACC Offshore Services Holdings (POSH), part of the empire of Malaysia's richest man Robert Kuok, has roped in Hwang Investment Management Berhad and Fortress Capital Asset Management as cornerstone investors for its Singapore listing, which sources close to the matter said could raise about $400 million. The two cornerstone investors would take up 85.6 million shares, according to the company's preliminary prospectus. POSH operates a fleet serving offshore oilfields in Asia, Africa and Latin America. Singapore is home to the world's two biggest rig builders, Keppel Corp Ltd and Sembcorp Marine Ltd, as well as smaller oil services companies such as Ezion Holdings Ltd. The sources declined to be identified because the information has not been made public.

Shipping luminaries gathered recently in New York to discuss issues and recognize achievements at the 2013 North American World Maritime Day and NAMEPA (North American Marine Environment Protection Association) Marine Environment Protection Awards Dinner. “NAMEPA was honored to host this annual event, and gratified by the interest and participation at the highest levels of shipping in our industry” stated NAMEPA Chairman Clay Maitland. Topics covered in the day’s conference included promoting a safety culture and environmental stewardship…

Statoil ASA has signed an agreement to divest minority interests in the Gullfaks and Gudrun fields offshore Norway and exit the non-core, non-operated Schiehallion and Rosebank fields, West of Shetlands. In addition to the cash consideration of USD 2.65 billion, the transaction with Austrian oil and gas company OMV includes a contingent payment and involves a partnership between the two companies. Statoil reduces its ownership share in Gullfaks from 70 % to 51 % and from 75 % to 51 % in Gudrun, and retains its operatorships on both fields. "Through this transaction, Statoil captures value created through asset development and unlocks capital for investment in high return projects in core areas. This includes our recent discoveries on the Norwegian continental shelf.

According to a report from The Telegrapch, nuclear power has become a hard sell in many parts of the world since the disaster at the Fukushima nuclear plant in Japan and natural gas continues to benefit. Bank of America Merrill Lynch said it saw demand rising so fast for natural gas that it expects the market to start tightening in the second half of next year.  Source: The Telegraph

Resurgent interest in construction of giant container ships likely to benefit Chinese shipbuilder Bank of America-Merrill Lynch, as reported by Reuters America Latina news, said it sees China-based Yangzijiang Shipbuilding Ltd benefiting from potential orders after a revival of interest from container shipping firms in bigger vessels, . Reports indicate that Taiwan's Evergreen, the world's sixth-largest container shipping firm, ordered 10 vessels with a capacity of 13,800 twenty-foot containers (TEU) each. Last year, the world's largest container shipping company, Maersk Line, ordered 10 18,000 TEU ships and later exercised the option for another 10, sparking others like Singapore's Neptune Orient Lines Ltd to increase their fleet.

Bank of America-Merrill Lynch said that it sees Yangzijiang Shipbuilding Ltd. benefiting from potential orders after a revival of interest from container shipping firms in larger vessels. The broker’s outlook came after reports that Taiwan's Evergreen, the world's sixth-largest container shipping firm, ordered 10 vessels with a capacity of 13,800 twenty-foot containers (TEU) each. "Evergreen Marine decided to lease ten 13,800-TEU container ships from Korea Infrastructure Investments Asset Management Co (KIIMA). KIIMA will place new build orders with Hyundai Heavy," the broker said in a report. Merrill has a buy rating on Yangzijiang's stock with a target price of S$2.12.