China Huarong AMC – Stay OW post new supply, dated Nov 3
A $57m newbuilding order for two panamax bulkers recently agreed by Oak Maritime at Jiangnan Shipyard is in danger of falling through because of a chronic shortage of steel plate in China.Hong Kong-based Oak recently won the two much-sought-after panamax-bulker delivery slots in 2006 at Jiangnan after competing with 30 other shipowners.Oak is reported to have offered Jiangnan, part of the China State Shipbuilding Corp , $28.5m for each of the 74,000-dwt ships. Jiangnan took Oak's bid, despite receiving better offers, because of the established commercial relationship between the two companies.But Oak's Steve Hsu has now been told the order has been put on hold after the yard revealed it could not secure enough steel plate.
In this note we present our views on the recently completed multi-tranchebond issuance by China Huarong Asset Management (HRAM). Fundamentally,we remain constructive on HRAM, its near-term business dynamics (incl. thatof its banking subsidiary) and its ability to maintain credit ratings at theircurrent levels, despite the Negative outlook by S&P. We continue to seepockets of value along HRAM’s curve despite the recent material tightening ofspreads together with the rest of China IG universe