Japan Bank for International Cooperation ( JBIC ) has signed four loan agreements amounting to US$198 million ( JBIC portion ) for the container ship leasing business of Singapore-based Ocean Network Express ( ONE ).

The syndicated loan is co-financed with the Tokyo branches of BNP Paribas, HSBC, and Citibank, bringing the total co-financing amount to US$396 million. Nippon Export and Investment Insurance ( Nexi ) is providing the insurance for the loan from the commercial lenders. BNP Paribas is also acting as the ECA ( export credit agency ) coordinator.

The financing supports ONE’s procurement of four large 13,700 TEU container ships built by Nihon Shipyard Co ( NSY ) and Imabari Shipbuilding Co via four special purpose companies.

The loan is JBIC’s first vessel-related financing using the Japanese operating lease with call option ( Jolco ) structure.  The financing scheme involves Japanese investors purchasing an asset – container ships in this case – and leasing it to an operator with the option to buy the asset at a predetermined price at the end of the lease term. The scheme carries tax benefits for the investors.

This is the first ship financing project Nexi has underwritten under the Jolco scheme. By using the Jolco structure, the initiative aims to enhance the international competitiveness of the Japanese shipbuilding industry, which is an important sector as the country relies on maritime trade for more than 99% of its total trade volume.

ONE is an international container shipping company established in Singapore in July 2017 through the integration of the container shipping businesses of three major Japanese shipping companies: Nippon Yusen, Mitsui O.S.K. Lines, and Kawasaki Kisen.

The loan supports NSY and Imabari Shipbuilding, two of Japan’s leading shipbuilders, in receiving orders for large container ships that feature concept designs for the future conversion to next-generation fuels such as methanol and ammonia, as well as for the future installation of carbon dioxide capture devices. As such, the financing will also contribute to efforts to decarbonize the shipping industry.