KBRA Releases Research Report, “What a German Bank Sale Tells Us About Global Shipping”

NEW YORK--()--A consortium of private equity firms, led by American private equity firms Cerberus and JC Flowers, has reached agreement to buy HSH Nordbank, the long-troubled German public-sector bank, which nearly collapsed under the weight of its large, distressed shipping portfolio. HSH is one of the world’s largest shipping lenders. The bank, majority owned by the German states of Hamburg and Schleswig-Holstein (with JC Flowers already holding a 5.1% stake), is undergoing a mandatory privatization process, directed by the European Commission in compensation for state aid received. HSH remains burdened by its legacy assets, which have been separated into a non-core bank and are dominated by shipping loans.

What we found noteworthy is that a buyer was finally found and that the buyer has agreed to (1) retain the bank’s core shipping portfolio, while the non-core portfolio will be carved out and transferred to an acquisition vehicle, and (2) pay considerably more, approximately €1.0 billion, than what the press had been reporting (€200 million) but with the reduction to nonperforming assets last year and the negative adjustment to its 2017 results, the bank’s balance sheet will be much healthier than year ago. Taken together, we see this as yet another data point that the global shipping sector may finally be turning a corner.

To access the report, click here.

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About KBRA and KBRA Europe

Kroll Bond Rating Agency, Inc. is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, Kroll Bond Rating Agency, Inc. is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical:
For Kroll Bond Rating Agency, Inc.
Manish Consul, 646-731-2395
Senior Director
Corporates, New York
mconsul@kbra.com
or
Joanna (Asia) Drobnik, CFA, +353 1 907 9251
Director
Financial Institutions, Dublin
jdrobnik@kbra.com
or
Van Hesser, 646-731-2305
Senior Managing Director
Financial Institutions, New York
vhesser@kbra.com

Contacts

Analytical:
For Kroll Bond Rating Agency, Inc.
Manish Consul, 646-731-2395
Senior Director
Corporates, New York
mconsul@kbra.com
or
Joanna (Asia) Drobnik, CFA, +353 1 907 9251
Director
Financial Institutions, Dublin
jdrobnik@kbra.com
or
Van Hesser, 646-731-2305
Senior Managing Director
Financial Institutions, New York
vhesser@kbra.com