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

Sunday, 18 April 21
Indonesia is expected to witness 119 oil and gas projects commencing their operations across value chain during 2021-2025, accounting for 6% of the ...

Sunday, 18 April 21
The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that steel demand wil ...

Sunday, 18 April 21
China’s coal output rose 16% in the first quarter from the same period last year, bolstered by strong demand for winter heating and robust in ...

Wednesday, 14 April 21
Proposed coal mining expansions at odds with excess supply   India has stockpiled a record 132 million tonnes of coal – enough t ...

Wednesday, 14 April 21
Renewables are cheaper and more sustainable than gas imports, and can provide better energy security in developing nations   The emerg ...

   2 3 4 5 6   
Showing 16 to 20 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 ...

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