Ship financing is an arrangement that uses vessel charter fees as the principal source of repayment, while various forms of collateral structured around shipbuilding and charter agreements are assigned to mitigate credit risk. We leverage our wealth of experience and proven track record in this area to help clients obtain long–term funding to purchase vessels, both new and used.
Structure of a Typical Ship Financing Arrangement
- Parent company/representative invests in a special purpose company (SPC) established outside Japan to serve as a borrower.
- The SPC borrows funds for the purchase of the vessel, assigning various forms of collateral including the mortgage, shipbuilding contract (or purchase agreement, including refund guarantee), hull insurance receivables and the charter fee receivables (or charter contract).
- The SPC uses the funds obtained to pay for the vessel, and takes its possession from the shipbuilder.
- The SPC leases the vessel to a charterer and receives charter fees in return.
- The SPC uses the charter fees received to repay the loan.
- Terms and conditions will be determined on a case by case basis.
Lending Terms and Conditions
Cargo–carrying vessels including bulk carriers and container ships, chemical tankers, product tankers, pure car carriers, LPG tankers, and woodchip carriers.
The amount of the loan will be based on a comprehensive determination of the profitability of the transaction, and will not exceed the price of acquiring the vessel.
The loan period will be for the duration of the charter contract, including the construction period. A repayment schedule will be set in order to ensure that the actual repayment period will be within the legally–defined depreciation period (e.g., full payout in 15 years for a newly–built bulk carrier).
- Loans are subject to examination of factors such as market price of the relevant vessel and transaction profitability. Please contact Mizuho for details.
- Please note that fees may be charged to use these products or services. The amount and type differ depending on the details of individual transactions. Please contact Mizuho for more information.