Euronav says $150m bond provides the 'right balance'

Oversubscribed bond issue adds another pin to funding map with 'no pressure' to deploy the capital, says chief financial officer. 

Euronav has added another string to its funding bow after tapping the Norwegian bond market for $150m.

The tanker owner had been looking to collect between $100m and $200m from the unsecured issue, which closed on Tuesday.

Hugo De Stoop, chief financial officer at Euronav, says the company could have taken around $100m more given the issue was oversubscribed.

“We decided to go with $150m for this first-time issuance because that will provide the right level of liquidity in the secondary market as well as putting us on the right footprint in that market,” he said.

Euronav had $620m in available liquidity at the end of the first quarter, with the bond purse adding to that pot. However, it now has four suezmax newbuildings booked against long-term charters with Valero after doubling its orderbook at Hyundai Heavy Industries earlier this month.

“Do you attach the bond to those four vessels or do you use that capital for something else?” De Stoop said. “Does it matter? I don’t think so. It’s about balance-sheet management and making sure your cost of capital is adequate as well as your sources of funding.”

Euronav has bought 25 VLCCs since 2014 and has talked of further consolidation at a time when asset prices have fallen. “Believe us, we have no additional pressure to do something because we have raised that capital,” De Stoop said.

The tanker owner has explained its first call on the Nordic bond market as the latest step in diversifying its sources of capital.

It is listed in both New York and Brussels, entered a sale-and-leaseback deal for four VLCCs earlier this year and has funding from conventional banks and South Korean export credit agencies.

“It’s very important for us to have good diversification of our capital sources and not put all of our eggs in the same basket,” De Stoop said.

“We will continue to look at alternatives but it is important for everybody to know that the core capital will continue to come from our key lenders, the banking sector,” he added, noting Euronav still “ticks all the boxes” required to secure conventional loans.

“That is very important because it’s probably the best and the cheapest source of capital,” he said.

Euronav is now chaired by Norwegian banking veteran Carl Steen, who replaced Peter Livanos in late 2015.

Chief executive Paddy Rodgers says Steen has been influential in making sure the company is run with “a steady hand”. “He has not been an advocate of things Norwegian simply because he is Norwegian,” Rodgers said. “But I believe he supported us very strongly by buying a bond.”

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