Tailwind for Norway’s shipyards: NOK 2.6 billion in applications for Eksfin’s construction financing

In 2023, Norway’s shipyards experienced a strong uptick in demand for new ships. Every vessel built with construction financing guarantees from Eksfin were green – a fantastic development according to Eksfin’s CEO Tone Lunde Bakker.

More green ships from Norwegian shipyards

All of Eksfin’s construction financing guarantees in 2023 were green, which means that the vessels all have either an electric, hybrid, or hydrogen-based propulsion system, or that the vessel is to be used within the offshore wind sector. Increased activity in several industries explains the growth in applications for the construction loan guarantee scheme. Although much of this stems from the offshore wind sector, ferry companies as well as companies in the fisheries and aquaculture sector have also placed substantial orders with Norwegian shipyards and the maritime supplier industry in the past year.

“It’s fantastic to see that the demand for green ships from Norwegian shipyards is growing,” says Eksfin’s CEO, Ms. Tone Lunde Bakker. “Increased pressure on shipyards around the globe is increasing demand for ships also from Norway’s shipyards. As production costs rise, financing will become even more important. This growth demonstrates that what Eksfin has to offer is felt to be relevant to the shipyards. Furthermore, the scheme continues to have good capacity”, she says.

The Brødrene Aa, Ulstein Verft, Myklebust Verft, and Aas Mek. Verksted shipyards have all been granted construction loans guaranteed by Eksfin. All four are situated on the Western Coast of Norway: Brødrene Aa in Vestland county, the others in Møre and Romsdal. The banks with which Eksfin shares the risk are DNB, Sparebanken Møre, Sparebanken Sogn og Fjordane, and Nordea.

Volume of applications doubled in second half of 2023 for vessels of all sizes

Eksfin’s construction loan scheme is in place to guarantee the funding of shipbuilding at Norway’s shipyards. If the shipyard’s bank wants risk relief for the construction loan, the bank can apply to Eksfin for a guarantee for up to 75 percent of the loan, after the Norwegian government raised the upper limit from 50 percent in July. Thus, Eksfin’s construction loan guarantee safeguards the banks’ repayment, with an upper total limit of NOK 7 billion set by the Norwegian parliament, the Storting.

“The increase in the maximum guarantee percentage of each construction loan from 50 to 75 percent is a key contributor in strengthening the industry’s competitiveness, and increasing activity in the industry,” says Norway’s Minister of Fisheries and Ocean Policy, Ms. Cecilie Myrseth.

“Norway’s shipyards are experiencing stiff competition internationally, so it’s reassuring that the Government’s business promotion agencies are helping to boost activity, explains Myrseth.

Eksfin can boast a multifold increase in the monetary volume of applications from banks in 2023, and all applications led to guarantee offers from Eksfin. This growth is valued at more than NOK 2 billion, with 90 percent coming in during the second half of the year.

Ms. Solveig Frøland, head of Eksfin’s maritime department, explains that this growth stems from the shipyards having more ships on order, and the fact that the applications in the second half of the year relate to specific large projects with correspondingly high construction loan needs.

“We receive more applications for construction loan guarantees as the shipyards’ financing needs increase. Eksfin’s construction loan guarantee scheme is therefore a key indicator of the level of activity in the industry, both now and going forwards,” says Frøland.

Leiv Sindre Muren, CFO of the Myklebust shipyard, is very positive to Eksfin increasing its scope for financing: “This is helping to increase the banks’ flexibility, which can also benefit the shipyards when it comes to new and more capital-intensive projects.”