Tight bonding

Scorpio Tankers has managed to slice its borrowing costs for South Korean-built products newbuildings after closing a $125.25m bond deal.

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STNG achieved a rate of 1% over the London Interbank Offered Rate (Libor) on the notes, which are backed by the Export-Import Bank of Korea (Kexim). It is the first such bond the export credit agency has done in shipping.

Funds from the bond issue will be deducted from the amount Kexim has committed to STNG under a $429.6m credit facility, but the interest rate is 1.55% lower than that of the loan. The total interest rate on the bond currently is in the range of 1.4%

Proceeds will help finance 10 handymax newbuildings and eight long-range units coming from Korean yards.

The notes, due in 2019, are intended to trade on the Singapore Exchange Securities Trading Ltd.