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

Friday, 30 April 21
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...

Wednesday, 28 April 21
Despite the current challenges as a result of the global pandemic, 2021 is turning out to be a landmark year for the iron ore market with spot pric ...

Monday, 26 April 21
China aims to reduce the share of coal in its energy mix to less than 56% this year, according to a guideline released by the National Energy Admin ...

Wednesday, 21 April 21
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy p ...

Tuesday, 20 April 21
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...

   1 2 3 4 5   
Showing 11 to 15 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 ...

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