Japanese supplier and operator of offshore floating platforms Modec has issued USD 1.1 billion in bonds to refinance a floating production storage and offloading (FPSO) unit in Brazil.
The company said that the bond would fund the FPSO, chartered to the TUPI consortium led by Petrobras, with the aim of strategically diversifying its financing sources for Modec’s entire FPSO charter business.
The company explained that the move was made due to the expansion of the number of FPSO charter projects simultaneously executed by Modec in recent years, while the scale of financing for these projects is also increasing.
“In response to these changes in the business environment, the aims of issuing the project bond are to enhance Modec Group’s financial stability by diversifying its financing sources for FPSO projects, as well as to secure financing flexibility for the future growth of the Modec Group,” the company noted.
This project bond was issued for the FPSO Cidade de Mangaratiba MV24 which has been deployed and is currently in operation at the Iracema Sul oil field in the “pre-salt” region offshore Brazil.
The FPSO is chartered by a consortium formed by Petrobras (65%), Royal Dutch Shell plc (25%) and Petrogal Brasil S.A. (10%) under a fixed-price charter contract that extends until 2034.
The FPSO achieved the first oil production in October 2014 at which time, the 20-year charter of the FPSO began.
“This transaction marks the first project bond for an FPSO project sold in the Regulation S/Rule 144A market, and was sold to a broad range of international investors outside Japan, mainly in Europe and the United States. Total investor demand for the issue was approximately 2-times the issue amount of the USD 1.1 billion project bond,” Modec added.
Modec is currently carrying out 11 FPSO charter projects simultaneously all over the world, and four more FPSOs are currently under construction.