Japanese FPSO provider MODEC has decided to issue project bonds to international investors to refinance a floating production, storage and offloading (FPSO) vessel chartered to the TUPI consortium.
TUPI consortium is led by Petrobras with the aim of strategically diversifying its financing sources for MODEC’s entire FPSO charter business.
MODEC, a unit of Mitsui E&S Holdings that builds floating oil-drilling platforms, said that project bonds are issued against future revenue from the infrastructure projects they finance.
This project bond was issued for the FPSO Cidade de Mangaratiba MV24 which has been deployed and is currently in operation at the Iracema Sul (formerly Cernambi Sul) oil field, operated by Petrobras, in the giant "pre-salt" region offshore Brazil.
MODEC decided to list them in Singapore, where the instruments are actively traded by many financial investors, over the less-developed Japanese market.
In recent years, the number of FPSO charter projects simultaneously executed by MODEC is increasing and the scale of financing for these projects is also expanding.
In response to these changes in the business environment, the aims of issuing the project bond are to enhance MODEC Group's financial stability by diversifying its financing sources for FPSO projects, as well as to secure financing flexibility for the future growth of the MODEC Group.
This transaction marks the first project bond for an FPSO project sold in the Regulation S/Rule 144A market, and was sold to a broad range of international investors outside Japan, mainly in Europe and the United States.
Total investor demand for the issue was approximately 2-times the issue amount of the $1.1 billion project bond. The strong reception for the bond in the international market highlights MODEC's highly praised asset management capabilities as well as operations and maintenance for FPSOs.
MODEC is currently carrying out 11 FPSO charter projects simultaneously all over the world, and four more FPSOs are currently under construction. With diverse means of financing, which can be applied to both existing and new charter projects, MODEC is able to respond more flexibly to the recent burgeoning demand for FPSOs and thus establish a robust position in the FPSO industry.
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