“We expect our lending volume to remain lower than in previous years as a result of the ongoing downturn in offshore-related sectors. However, the number of applications received remains stable and high, with an increase in applications from mainland industry, the maritime industry excluding offshore, and certain oil and gas segments,” says Export Credit Norway CEO Otto Søberg.
Restructuring
Although the total number of applications was somewhat higher than in the fourth quarter of last year, the application volume decreased. Lower oil prices and reduced investment levels in the offshore sector are increasingly shifting the focus of ship-financing applications onto passenger vessels, fishing boats, wellboats and service ships for offshore wind farms. In January 2015, offshore ships accounted for some 82% of yard order books. By September 2016, the offshore percentage had fallen to 42%.
“The figures confirm that certain segments are restructuring. This applies particularly to shipyards, who are continuing to shift focus from the offshore sector onto different passenger vessels, fishing boats, wellboats and service ships for offshore wind farms.We are impressed at the adaptability demonstrated by the shipbuilding industry as a whole,” says Søberg.
Growth in mainland industry and environmental technology
Limited data is available on the pace of restructuring in other sectors. However, Export Credit Norway regularly encounters individual companies who are securing new customers in new markets. Export Credit Norway’s own survey shows that foreign sales of renewable energy technology and services grew by up to 30% from 2014 to 2015. While the depreciation of the Norwegian krone also played a significant role, a considerable part of the increase is linked to offshore shipping companies’ success in winning contracts related to offshore wind production.
Ongoing loan restructuring
Export Credit Norway’s lending portfolio totalled NOK 76.5 billion as at 31 December 2016 (Q3 2016: NOK 76.5 billion). Exchange rate movements, particularly against the US dollar, increased the lending balance by NOK 3.4 billion in Q4 2016, compared to Q3. Export Credit Norway is processing a large number of enquiries regarding instalment deferment and loan restructuring, primarily occasioned by the challenging market conditions faced by many borrowers due to the decline in oil prices and an over-supply of oil-service vessels. “Further large-scale restructurings are expected in 2017. It may also be necessary to restructure previously restructured loans to certain borrowers, as the economic downturn has proven to be more prolonged than initially expected,” says Søberg. As at quarter-end, 74.4% of the company’s lending portfolio was guaranteed by GIEK. The remaining 25.6% of the portfolio was guaranteed by Norwegian banks (13.2%) and foreign banks (12.4%).
