Navigator Gas has secured a S$220mn loan facility for its newbuild liquefied petroleum gas (LPG) carrier, Navigator Jorf, despite turbulent times in the shipping sector.

The facility consists of a term loan agreement, revolving credit facility and newbuilding term loan facility. Lenders include ABN Amro, DVB Bank, Skandinaviska Enskilda Banken (SEB) and Nordea.

The new agreement will replace two existing facilities that are due to mature in April 2017 and will provide up to 70% of the cost of the newbuild. The facility, which is secured by 10 of the company’s vessels, will expire in seven years and carries a US Libor plus 2.6% margin interest rate.

Having completed financing for the Navigator Jorf, the company now has funding lined up for all its newbuilds, CFO Niall Nolan tells GTR.

“The four banks have existing exposure to Navigator, so [securing the deal] was relatively straightforward,” he says.

The vessel is due to be delivered to Navigator in 2017 and is one of five newbuilds the company has scheduled for delivery next year. Three of the vessels have secured long-term charters, including the Jorf, which has a 10-year contract in the Mediterranean.

The new ships will be in addition to four that delivered to the company in 2016 and seven that were delivered over 2014 and 2015.

The LPG market has been marred with oversupply, depressing day rates and earnings. Last month the collapse of Korean shipping giant Hanjin (link to story) was a prime example of the overcapacity dogging the shipping sector in general.

Commenting on the market outlook, Nolan says there is more supply than demand for hydrocarbons around the world, and larger carriers have experienced extreme volatility as a result, with earnings dropping from a high of US$110,000 per day in 2014 to around US$10,000 per day today.

“Our sector is somewhat different as the vessels can carry petrochemical as well as LPG. Our utilisation over the last 10 years has been 97%; this has reduced recently to 90% this year,” he says.

“Our rates at beginning of January were at a high of US$31,000 and dropped to US$27,200 in Q2. I believe current market rates are around US$18,000-US$20,000.”