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Opening Remarks 29 th Annual Marine Money Week June 22, 2016 - PowerPoint PPT Presentation

Opening Remarks 29 th Annual Marine Money Week June 22, 2016 Jefferies LLC Buying a Bargain or Catching a Falling Knife? 2 Market Snapshot June 2015 June 2016 Global GDP Growth (1 Yr Fwd) 2.9% 2.4% Brent Crude Oil ($/barrel) $63.87


  1. Opening Remarks 29 th Annual Marine Money Week June 22, 2016 Jefferies LLC

  2. Buying a Bargain or Catching a Falling Knife? 2

  3. Market Snapshot June 2015 June 2016 Global GDP Growth (1 Yr Fwd) 2.9% 2.4% Brent Crude Oil ($/barrel) $63.87 $49.17 10-Year U.S. Treasury Rate 2.32% 1.62% Single B High Yield Index 6.48% 7.53% Baltic Dry Index 725 587 Source: EIA, Bloomberg, Clarksons, United States Treasury, World Bank. Note: Statistics as of June 17, 2015 and June 17, 2016. 3

  4. Overall Market Performance 300 Percent Jun-15 Jun-16 Change S&P Index 2,100 2,071 (1.4)% 250 VIX 14.50 19.41 33.9% Brent Crude $63.87 $49.17 (23.0)% High Yield Single B 6.48% 7.53% 16.2% 200 150 +33.9% +16.2% 100 (1.4)% (23.0)% 50 February Market Bottom 0 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 S&P Index VIX High Yield Single B Brent Crude Source: Bloomberg, CapitalIQ. Note: Statistics as of June 17, 2015 and June 17, 2016. 4

  5. S&P: Recovering from February’s Market Bottom +1.3% Increase since June 2015 Jun-15 Jun-16 Percent Change 2,200 S&P Index 2,100 2,071 (1.4)% 2,150 2,100 2,050 2,000 (1.4)% 1,950 Decrease since June 1,900 2015 1,850 1,800 February Market Bottom (9.1)% decrease since 1,750 January 2016 and (12.9)% decrease since June 2015 1,700 1,650 Jun-2015 Oct-2015 Feb-2016 Jun-2016 Source: Bloomberg. Note: Statistics as of June 17, 2015 and June 17, 2016. 5

  6. Baltic Dry Index: The Rise and Fall +68.5% Increase since June 1,400 2015 Jun-15 Jun-16 Percent Change BDI 725 587 (19.0%) 1,200 1,000 800 600 (19.0)% 400 Decrease since June 2015 200 February Market Bottom (38.7)% decrease since January 2016 and (60.0)% decrease since June 2015 0 Jun-2015 Oct-2015 Feb-2016 Jun-2016 Source: Bloomberg. Note: Statistics as of June 17, 2015 and June 17, 2016. 6

  7. Indexed Timecharter Rates 250 Percent Jun-15 Jun-16 Change VLCC $47,500 $38,000 (20.0)% MR $18,250 $15,875 (13.0)% 200 Capesize $12,125 $7,625 (37.1)% Clarkson’s Containership 62 41 (34.0)% Timecharter Rate Index (1) 150 100 (13.0)% (20.0)% (34.0)% (37.1)% 50 February Market Bottom 0 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 VLCC MR Capesize Clarkson Containership index (1) Clarkson index based on $/day per TEU; current month shows latest available end month data. Source: Clarksons. 7

  8. Rates Continue to Drive Share Price Performance 150 125 100 (1.4)% 75 (36.3)% (41.0)% 50 (70.8)% 25 February Market Bottom 0 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 Tankers DryBulk Container S&P Source: Capital IQ. Note: Indexes are market capitalization weighted. “Tankers” represents Crude, Product, and Mixed Fleets. Share prices as of June 17, 2015 and June 17, 2016. 8

  9. Asset Values Sliding ($ millions) VLCC Resale Prices MR Resale Prices Capesize Resale Prices $46.0 110.0 $105.0 40.0 45.0 $37.5 (6.7)% (21.7)% (16.2)% 100.0 $35.0 35.0 40.0 $88.0 90.0 $36.0 35.0 30.0 80.0 30.0 70.0 25.0 60.0 25.0 20.0 50.0 20.0 15.0 40.0 15.0 30.0 10.0 10.0 20.0 5.0 5.0 10.0 0.0 0.0 0.0 Jun-15 Jun-16 Jun-15 Jun-16 Jun-15 Jun-16 Source: Clarksons Note: Values as of June 19, 2015 and June 17, 2016. 9

  10. Shipping Capital Markets Activity Last 12 Months Dollar Volume of Capital Raises Dollar Volume of Capital Raises July 2014 – June 2015 July 2015 – June 2016 ($millions ) ($ millions) $3,000 $2,871 $3,000 $2,500 $2,500 $2,000 $2,000 $1,532 $1,500 $2,621 $1,500 $1,000 $855 $1,000 $1,276 $417 $500 $500 $685 $324 $275 $200 $120 $115 $90 $75 $52 $417 $324 $0 $0 $200 $200 $205 $250 $170 $120 $115 $90 $0 $0 Equity High Yield Debt Term Loan B Total Number of Deals: 27 Total Number of Deals: 10 Total Capital Raised: $5.7 billion Total Capital Raised: $1.1 billion Source: Dealogic. 10

  11. Recent Shipyard Woes Date Shipyard Country Status Lowered charter rates to get a debt- Jun-16 Hyundai Merchant Marine Co. South Korea revamp plan Jun-16 STX Offshore & Shipbuilding South Korea Court-led restructuring plan Declared bankrupt along with two affiliate companies Zhong Chuan Heavy May-16 Zhong Chuan Heavy Industry Shipbuilding China Industry Equipment and Zhoushan Xuhua Metal Materials Feb-16 Sainty Marine Co China Bankruptcy filing accepted Jan-16 Wuzhou Shipbuilding China Filed for bankruptcy liquidation Nov-15 ShinaSB South Korea Filed for bankruptcy Jul-15 Mingde Heavy Industry China Declared bankruptcy Apr-15 Zhuangji Shipbuilding China Filed for bankruptcy Mar-15 Zhejiang Zhenghe Shipbuilding Co China Filed for restructuring at a district court Filed an application for debt and Mar-15 Jiangsu Eastern Heavy Industries shipyard China liabilities restructuring Mar-15 Dongfang Heavy Industry China Filed for bankruptcy Source: Wall Street Journal, Tradewinds. 11

  12. Buying a Bargain or Catching a Falling Knife? 12

  13. The Journey is Long, but Well Worth It 13

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