Issuance of world's first publicly listed project bond to refinance FPSO charter project

Sep. 18, 2019

Mitsui & Co., Ltd. ("Mitsui", Head Office: Tokyo, President and CEO: Tatsuo Yasunaga) has issued a US$1.1 billion project bond (the "Project Bond") in the international capital markets to repay existing loans procured from financial institutions via limited recourse financing for the Floating Production Storage and Offloading ("FPSO") vessel MV24 "Cidade de Mangaratiba" currently under a long-term charter to a consortium led by the Brazilian oil company Petróleo Brasileiro S.A. ("Petrobras") operating in the offshore pre-salt region in Brazil.

The Project Bond was issued for an FPSO operating in the Iracema Sul field in Brazil's pre-salt region. The FPSO has equity participation from Mitsui, MODEC, Inc., Mitsui O.S.K. Lines, Ltd., and Marubeni Corporation. As the largest investor in the FPSO, Mitsui contributed to the successful issuance of the world's first publicly listed project bond for an FPSO, leveraging its track record of financing in a diverse range of projects, its knowledge of the infrastructure business and its strong relationship with Petrobras.

The FPSO is under a long-term 20-year fixed-price charter contract which began in October 2014 for a consortium operated by Petrobras, and is responsible for about 4% of hydrocarbon (crude oil and natural gas) production in Brazil, while the Iracema field represents 33% of Brazil's total oil production.

Mitsui is currently working on 18 FPSO/FSOs (Floating Storage and Offloading) charter projects worldwide. To date, funding for the construction of FPSO projects has come from equity contribution of sponsors and from project financing from financial institutions. As demand for financing for additional active FPSO projects increases, project bonds are expected to be an increasingly effective option to diversify funding sources and improve financial efficiency.

Mitsui has identified cash flow-focused management as a key initiative in its Medium-term Management Plan. In the infrastructure business, we will seek opportunities to refinance existing businesses using project bonds and to pursue orders for new business with the goal of promoting the implementation of growth strategies and strengthening our financial base.

FPSO Cidade de Mangaratiba MV24<br />
Source: MODEC, Inc.FPSO Cidade de Mangaratiba MV24
Source: MODEC, Inc.