Eid Mubarak

Submit Your Articles
We welcome article submissions from experts in the areas of coal, mining, shipping, etc.

To Submit your article please click here.

International Energy Events

WTI Crude Oil

BRENT Crude Oil

Search News
Latest CoalNews Headlines
Wednesday, 25 November 20
Watson Farley & WilliamsThe likely replacement of the LIBOR at the end of 2021 creates difficult technical and practical issues for all sectors of business and finance. The concerns intensify as the projected deadline grows closer against a background of some continuing uncertainty and lack of consensus about the details of the approach to take. Some recent developments are worth noting and putting in context for the shipping industry and ship financiers. There are issues both for loans now being documented – and also for all LIBOR-based deals likely to continue beyond 2021.
Looking at new loans first, what are the options? (Some of the key terms and abbreviations are set out in the glossary at the end.)
Provide for the agreement to be amended at a later date
This can be done by using either the LMA Replacement Benchmark wording, old ARRC wording or bank-bespoke wording. Where there is hedging in place this should be aligned so that there should be no mismatch. Increasingly, the additional LMA wording providing for discussions to start if LIBOR is still being used by an agreed date is being added. The date now most frequently suggested for the start of negotiations is the end of Q1 although September seems to be the second favourite. The LMA (and old ARRC) wording provides for borrowers to agree the amendments. In some bilateral facilities lenders seek a unilateral right to select the replacement.
Document now using an RFR from day one or with a switch mechanism using any of LSTA, APLMA, ARRC or LMA suggested drafting
Some lenders making new sterling loans have used SONIA as a benchmark, including one which has been documented by this firm – with others in progress. The position in relation to US dollar loans and the use of SOFR appears to be more cautious. US dollars are, of course, the dominant currency in ship financing – see more on this below. It seems that immediate use of SOFR in new loans has to date been restricted to some investment grade borrowers, often in relation to standby facilities and not in an asset finance context. That said, it is of interest that it has been recently reported that the bulk operator Seastar has closed a new loan with a SOFR switch mechanism based on the LMA Rate Switch Agreement.
ARRC hardwired approach
A combined alternative to the above two options was produced by the ARRC in June 2020 whereby a switch to an agreed waterfall of SOFR alternatives could be hardwired into a facility agreement leaving the finer details to be added later by way of amendment. They have said it should be used for US dollar LIBOR-based loans from 30 September 2020. The LSTA says this has started to be used and a number of banks have mentioned using the Hardwired Approach. However, in our experience, many have so far shown a reluctance to commit to a particular rate methodology (which is essential if it is to be hardwired) and have instead opted for the LMA Replacement Benchmark wording, or variations of this.
Constructive thinking from the FMLC
A working group formed by the FMLC has written a paper which fully airs the issues. Possible solutions mooted include UK legislative changes and – most interestingly and its favoured approach – the preservation of screen rate continuity by amending the feeds on the Bloomberg and Reuters LIBOR01 pages to display a successor rate. This ingenious approach could mitigate the documentation remediation issues referred to below, including those specific to ship finance.
Uncertainty about US dollar deals?
Against this background, it is interesting that, in the last week, IBA has announced that it will consult the market on ending the publication of LIBOR rates for sterling, Swiss francs, euros and yen at the end of 2021 – but conspicuously and, perhaps significantly, did not include US dollars in that list of currencies. It says: “Discussions involving IBA, the Financial Conduct Authority (FCA), other official sector bodies and the panel banks are continuing regarding the future of USD LIBOR”. This creates yet more uncertainty for businesses which finance themselves in US dollars and for their lenders – and specifically for the shipping industry and might reinforce some slowness in moving unequivocally over to SOFR.
Existing US dollar LIBOR shipping loans
While the relevant bodies and authorities – and hence the market – continue to ponder or vacillate, there is also looming up with some urgency the issue of dealing with a switch in relation to existing LIBOR–based loans. This is a major documentation remediation exercise.
There is a further issue which is particular to ship finance, namely the likely need to register amendments or supplements to a large number of mortgages. The three largest flag states by tonnage are Panama, Liberia and the Marshall Islands. Their laws and practice in relation to mortgage registration are each, in different ways, prescriptive in relation to the description and recording of the obligations secured by the mortgage. The issue potentially arises in relation to the laws of certain other flag states, such as Greece, but the ‘big three’ registers have the most impact in practice.
It is likely that mortgagees will take a cautious approach to ensuring that they continue to be fully secured in the context of a new method of determining the reference rate of interest. This points to the need to record supplements or addenda to potentially thousands of existing mortgages. This issue is also relevant to new loans being documented. For new loans, whether there is a need to register a supplement or addendum to a mortgage upon transition to a new benchmark will depend on an analysis of the law of the relevant flag state and also the way that the transition away from LIBOR is documented. A more hardwired approach in documents now might reduce the perceived need for a supplement or addendum to the mortgage if and when transition away from LIBOR occurs.
This is an additional documentary burden and headache for the shipping industry specifically in circumstances where it faces the same challenges presented by LIBOR transition generally as all other industries. It could potentially be avoided by a change of law of the relevant flag states.
It is to be hoped that the way ahead will become clearer before too long so that, as regards both new shipping loans and existing deals, documentary issues can be addressed in a timely and orderly fashion. We will be keeping you informed, both by specific advice and through more articles, as further developments arise.
Source: Watson Farley & Williams LLP

If you believe an article violates your rights or the rights of others, please contact us.

Recent News

Wednesday, 12 May 21
U.S. energy Information Administration expects U.S. coal production to total 582 million short tons (MMst) in 2021, 43 MMst (8%) more than in 2020. ...

Wednesday, 12 May 21
Tanker S&P is finally back! For an extended period, Dry bulk & Wet market rates have been diverging, with the SnP deals on each sect ...

Monday, 10 May 21
There is no second life for coal Pakistan’s intention to use coal for power production through gasification and liquefaction technologie ...

Sunday, 09 May 21
Coal stocks have surged this year – along with the wider energy sector – but experts warn these are likely short-term gains for an indu ...

Sunday, 09 May 21
Malayan Banking Bhd (Maybank) will stop financing new coal activities as part of its sustainable agenda.   Currently, coal financing m ...

   1 2 3 4 5   
Showing 1 to 5 news of total 6289
News by Category
Popular News
Total Members : 27,417
User ID
Remember Me
By logging on you accept our TERMS OF USE.
Forgot Password
Our Members Are From ...

  • Barclays Capital - USA
  • Agrawal Coal Company - India
  • GMR Energy Limited - India
  • Enel Italy
  • Chamber of Mines of South Africa
  • Maruti Cements - India
  • Kalimantan Lumbung Energi - Indonesia
  • Global Business Power Corporation, Philippines
  • Vitol - Bahrain
  • TeaM Sual Corporation - Philippines
  • Rashtriya Ispat Nigam Limited - India
  • KPCL - India
  • Merrill Lynch Commodities Europe
  • Port Waratah Coal Services - Australia
  • Krishnapatnam Port Company Ltd. - India
  • LBH Netherlands Bv - Netherlands
  • Pipit Mutiara Jaya. PT, Indonesia
  • Sucofindo - Indonesia
  • Wilmar Investment Holdings
  • Videocon Industries ltd - India
  • Thriveni
  • Mitra SK Pvt Ltd - India
  • JPMorgan - India
  • DBS Bank - Singapore
  • London Commodity Brokers - England
  • Dr Ramakrishna Prasad Power Pvt Ltd - India
  • Globalindo Alam Lestari - Indonesia
  • TRAFIGURA, South Korea
  • Thomson Reuters GRC
  • NALCO India
  • Adani Power Ltd - India
  • Mjunction Services Limited - India
  • Samtan Co., Ltd - South Korea
  • SN Aboitiz Power Inc, Philippines
  • Geoservices-GeoAssay Lab
  • Infraline Energy - India
  • Pinang Coal Indonesia
  • Star Paper Mills Limited - India
  • HSBC - Hong Kong
  • Indo Tambangraya Megah - Indonesia
  • Cemex - Philippines
  • Bhoruka Overseas - Indonesia
  • Intertek Mineral Services - Indonesia
  • Reliance Power - India
  • Ministry of Finance - Indonesia
  • CESC Limited - India
  • APGENCO India
  • Japan Coal Energy Center
  • Central Electricity Authority - India
  • Antam Resourcindo - Indonesia
  • Ambuja Cements Ltd - India
  • Banpu Public Company Limited - Thailand
  • Mitsubishi Corporation
  • Electricity Generating Authority of Thailand
  • Malabar Cements Ltd - India
  • Planning Commission, India
  • Coalindo Energy - Indonesia
  • ING Bank NV - Singapore
  • Berau Coal - Indonesia
  • Essar Steel Hazira Ltd - India
  • Cosco
  • Fearnleys - India
  • Madhucon Powers Ltd - India
  • Bhushan Steel Limited - India
  • Argus Media - Singapore
  • SGS (Thailand) Limited
  • Asia Pacific Energy Resources Ventures Inc, Philippines
  • Idemitsu - Japan
  • Karaikal Port Pvt Ltd - India
  • Bayan Resources Tbk. - Indonesia
  • Russian Coal LLC
  • Siam City Cement PLC, Thailand
  • Britmindo - Indonesia
  • CoalTek, United States
  • Jaiprakash Power Ventures ltd
  • Shenhua Group - China
  • Karbindo Abesyapradhi - Indoneisa
  • Renaissance Capital - South Africa
  • Indika Energy - Indonesia
  • New Zealand Coal & Carbon
  • Credit Suisse - India
  • Directorate General of MIneral and Coal - Indonesia
  • Arutmin Indonesia
  • UBS Singapore
  • Kapuas Tunggal Persada - Indonesia
  • Kideco Jaya Agung - Indonesia
  • Vedanta Resources Plc - India
  • The University of Queensland
  • Holcim Trading Pte Ltd - Singapore
  • Bahari Cakrawala Sebuku - Indonesia
  • International Coal Ventures Pvt Ltd - India
  • Sree Jayajothi Cements Limited - India
  • World Bank
  • Bharathi Cement Corporation - India
  • Borneo Indobara - Indonesia
  • Commonwealth Bank - Australia
  • Goldman Sachs - Singapore
  • Asia Cement - Taiwan
  • Bulk Trading Sa - Switzerland
  • Cargill India Pvt Ltd
  • Ince & co LLP
  • Vizag Seaport Private Limited - India
  • PetroVietnam Power Coal Import and Supply Company
  • PowerSource Philippines DevCo
  • Lanco Infratech Ltd - India
  • Wood Mackenzie - Singapore
  • AsiaOL BioFuels Corp., Philippines
  • EMO - The Netherlands
  • Bukit Asam (Persero) Tbk - Indonesia
  • Freeport Indonesia
  • NTPC Limited - India
  • Cigading International Bulk Terminal - Indonesia
  • Australian Coal Association
  • Asmin Koalindo Tuhup - Indonesia
  • Deloitte Consulting - India
  • GHCL Limited - India
  • Africa Commodities Group - South Africa
  • KEPCO - South Korea
  • IBC Asia (S) Pte Ltd
  • Global Green Power PLC Corporation, Philippines
  • The India Cements Ltd
  • Maybank - Singapore
  • Sical Logistics Limited - India
  • Coal and Oil Company - UAE
  • Power Finance Corporation Ltd., India
  • Australian Commodity Traders Exchange
  • Inspectorate - India
  • Kobe Steel Ltd - Japan
  • Economic Council, Georgia
  • Parry Sugars Refinery, India
  • GVK Power & Infra Limited - India
  • Deutsche Bank - India
  • Uttam Galva Steels Limited - India
  • Latin American Coal - Colombia
  • TNB Fuel Sdn Bhd - Malaysia
  • Ministry of Transport, Egypt
  • Thermax Limited - India
  • Carbofer General Trading SA - India
  • Jorong Barutama Greston.PT - Indonesia
  • KPMG - USA
  • ICICI Bank Limited - India
  • Marubeni Corporation - India
  • Binh Thuan Hamico - Vietnam
  • Meenaskhi Energy Private Limited - India
  • Heidelberg Cement - Germany
  • PTC India Limited - India
  • Dong Bac Coal Mineral Investment Coporation - Vietnam
  • Medco Energi Mining Internasional
  • Energy Development Corp, Philippines
  • ACC Limited - India
  • Platou - Singapore
  • EIA - United States
  • Total Coal South Africa
  • PNOC Exploration Corporation - Philippines
  • Thai Mozambique Logistica
  • Jindal Steel & Power Ltd - India
  • Bank of Tokyo Mitsubishi UFJ Ltd
  • VISA Power Limited - India
  • Maharashtra Electricity Regulatory Commission - India
  • Ind-Barath Power Infra Limited - India
  • Kartika Selabumi Mining - Indonesia
  • Bank of America
  • Rudhra Energy - India
  • Semirara Mining and Power Corporation, Philippines
  • Xstrata Coal
  • Aditya Birla Group - India
  • Indonesian Coal Mining Association
  • OCBC - Singapore
  • Tata Power - India
  • GN Power Mariveles Coal Plant, Philippines
  • Chettinad Cement Corporation Ltd - India
  • Petron Corporation, Philippines
  • Petrosea - Indonesia
  • Gupta Coal India Ltd
  • Independent Power Producers Association of India
  • Indian Energy Exchange, India
  • The State Trading Corporation of India Ltd
  • Minerals Council of Australia
  • BNP Paribas - Singapore
  • Siam City Cement - Thailand
  • Truba Alam Manunggal Engineering.Tbk - Indonesia
  • Gujarat Electricity Regulatory Commission - India
  • Mitsui
  • Cement Manufacturers Association - India
  • KOWEPO - South Korea
  • Samsung - South Korea
  • South Luzon Thermal Energy Corporation
  • San Jose City I Power Corp, Philippines
  • Energy Link Ltd, New Zealand
  • Sarangani Energy Corporation, Philippines
  • Mintek Dendrill Indonesia
  • Indian School of Mines
  • U S Energy Resources
  • WorleyParsons
  • Sakthi Sugars Limited - India
  • Kepco SPC Power Corporation, Philippines
  • SUEK AG - Indonesia
  • ANZ Bank - Australia
  • Bukit Makmur.PT - Indonesia
  • Global Coal Blending Company Limited - Australia
  • White Energy Company Limited
  • Kohat Cement Company Ltd. - Pakistan
  • IHS Mccloskey Coal Group - USA
  • ASAPP Information Group - India
  • Alfred C Toepfer International GmbH - Germany
  • RBS Sempra - UK
  • India Bulls Power Limited - India
  • Peabody Energy - USA
  • Sindya Power Generating Company Private Ltd
  • BRS Brokers - Singapore
  • The Treasury - Australian Government
  • PetroVietnam
  • CCIC - Indonesia
  • Bukit Baiduri Energy - Indonesia
  • Mercator Lines Limited - India
  • Coal India Limited
  • Singapore Mercantile Exchange
  • TANGEDCO India
  • IEA Clean Coal Centre - UK
  • Asian Development Bank
  • Kaltim Prima Coal - Indonesia
  • Pendopo Energi Batubara - Indonesia
  • Thiess Contractors Indonesia
  • Bangladesh Power Developement Board
  • Trasteel International SA, Italy
  • Timah Investasi Mineral - Indoneisa
  • Semirara Mining Corp, Philippines
  • Runge Indonesia
  • CNBM International Corporation - China
  • Central Java Power - Indonesia
  • SASOL - South Africa
  • Cebu Energy, Philippines
  • bp singapore
  • Clarksons - UK
  • MS Steel International - UAE
  • European Bulk Services B.V. - Netherlands
  • Metalloyd Limited - United Kingdom
  • Manunggal Multi Energi - Indonesia
  • GB Group - China
  • Orica Australia Pty. Ltd.
  • Gresik Semen - Indonesia
  • Bank of China, Malaysia
  • Indorama - Singapore
  • Oldendorff Carriers - Singapore
  • Price Waterhouse Coopers - Russia
  • Ernst & Young Pvt. Ltd.
  • Moodys - Singapore
  • J M Baxi & Co - India
  • Riau Bara Harum - Indonesia
  • Grasim Industreis Ltd - India
  • Humpuss - Indonesia
  • Coal Orbis AG
  • Billiton Holdings Pty Ltd - Australia
  • McKinsey & Co - India
  • Sojitz Corporation - Japan
  • Glencore India Pvt. Ltd
  • Eastern Energy - Thailand
  • Adaro Indonesia
  • Xindia Steels Limited - India
  • Mechel - Russia
  • Ceylon Electricity Board - Sri Lanka
  • Offshore Bulk Terminal Pte Ltd, Singapore
  • Parliament of New Zealand
  • Qatrana Cement - Jordan
  • Baramulti Group, Indonesia
  • Bhatia International Limited - India
  • Interocean Group of Companies - India
  • Miang Besar Coal Terminal - Indonesia
  • Indogreen Group - Indonesia
  • globalCOAL - UK
  • Larsen & Toubro Limited - India
  • Coeclerici Indonesia
  • Gujarat Sidhee Cement - India
  • Romanian Commodities Exchange
  • PLN - Indonesia
  • Gujarat Mineral Development Corp Ltd - India
  • Mercuria Energy - Indonesia
  • Bangkok Bank PCL
  • Edison Trading Spa - Italy
  • PLN Batubara - Indonesia
  • ETA - Dubai
  • Altura Mining Limited, Indonesia
  • Kumho Petrochemical, South Korea
  • Iligan Light & Power Inc, Philippines
  • Tata Chemicals Ltd - India
  • IOL Indonesia
  • Platts
  • Kobexindo Tractors - Indoneisa
  • Electricity Authority, New Zealand
  • Maersk Broker
  • Shree Cement - India
  • Malco - India
  • Leighton Contractors Pty Ltd - Australia
  • Therma Luzon, Inc, Philippines
  • Indonesia Power. PT
  • Formosa Plastics Group - Taiwan
  • Attock Cement Pakistan Limited
  • Thailand Anthracite
  • JPower - Japan
  • GNFC Limited - India
  • Standard Chartered Bank - UAE
  • Straits Asia Resources Limited - Singapore
  • Tanito Harum - Indonesia
  • Indian Oil Corporation Limited
  • Anglo American - United Kingdom
  • Coaltrans Conferences
  • Lafarge - France
  • Neyveli Lignite Corporation Ltd, - India
  • Petrochimia International Co. Ltd.- Taiwan
  • Coastal Gujarat Power Limited - India
  • SMC Global Power, Philippines
  • Maheswari Brothers Coal Limited - India
  • MEC Coal - Indonesia
  • Savvy Resources Ltd - HongKong
  • Toyota Tsusho Corporation, Japan
  • Posco Energy - South Korea
  • Merrill Lynch Bank
  • Sinarmas Energy and Mining - Indonesia
  • Jatenergy - Australia
  • IMC Shipping - Singapore
  • Aboitiz Power Corporation - Philippines
  • Barasentosa Lestari - Indonesia
  • World Coal - UK
  • GAC Shipping (India) Pvt Ltd
  • CIMB Investment Bank - Malaysia
  • Salva Resources Pvt Ltd - India
  • SRK Consulting
  • Rio Tinto Coal - Australia
  • Vale Mozambique
  • TNPL - India
  • Georgia Ports Authority, United States
  • Directorate Of Revenue Intelligence - India
  • UOB Asia (HK) Ltd
  • Surastha Cement
  • Permata Bank - Indonesia
  • SMG Consultants - Indonesia
  • Core Mineral Indonesia
  • Tamil Nadu electricity Board
  • Meralco Power Generation, Philippines
  • Makarim & Taira - Indonesia
  • Vijayanagar Sugar Pvt Ltd - India
  • Arch Coal - USA
  • Panama Canal Authority
  • OPG Power Generation Pvt Ltd - India
  • Cardiff University - UK
  • Eastern Coal Council - USA
  • Inco-Indonesia
  • Dalmia Cement Bharat India
  • Noble Europe Ltd - UK
  • McConnell Dowell - Australia
  • Simpson Spence & Young - Indonesia
  • Filglen & Citicon Mining (HK) Ltd - Hong Kong
  • Orica Mining Services - Indonesia
  • Ministry of Mines - Canada