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CQS Rig Finance Fund Ltd (RIG)

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Monday 23 August, 2010

CQS Rig Finance Fund Ltd

Shareholder Monthly Fact Sheet - July 2010

                          CQS Rig Finance Fund Limited

                   Shareholder Monthly Fact Sheet - July 2010

Following the significant sell off in the previous two months, equity and credit
markets rallied sharply in July. Clarity provided by the release of the European
bank  stress  test  data,  coupled  with  solid  retail  sales data and earnings
optimism, pushed the S&P 500 Index up 7% to close the month above the 1100 mark.
The  oil price  followed the  trend and  finished up  around 4% on  the month at
approximately USD 79 per barrel.

During July there were positive developments at the Macondo field in the Gulf of
Mexico.  The successful  fixing of  a new  capping stack  allowed extensive well
integrity  testing  to  take  place  and  the  pressure  inside  the  well to be
accurately  measured. Shortly thereafter,  BP completed the  cement plug sealing
off  the top part of the  well. The next step is  completing the relief well and
setting  a plug  low in  the well  to ensure  there are  no leaks from potential
ruptures deeper in the well bore. This should see the well permanently sealed.

As  at the close  of business on  30 July 2010, the estimated  NAV per share was
25.03 pence  against  19.70 pence  at  the  end  of  June. The  large gains were
attributable  to the significant  increase in the  value of the  bonds issued by
Skeie  Drilling & Production ASA (SKDP) following  the news of a takeover bid by
Rowan Companies Inc. The Company owns all four SKDP bonds in issue. On the 20th
July,  it was announced  that the Board  of Directors of  Rowan had approved the
purchase of all of the ordinary shares in SKDP. Rowan will launch a tender offer
for  the remaining 49.7% of  SKDP's outstanding ordinary  shares, and expects to
complete  the offer  in September  2010, following the  prospectus review by the
Norwegian  Financial Supervisory  Authority. The  company has  stated that it is
looking  at options regarding  the refinancing of  the bonds but  no clarity has
been provided as to its intentions at this point.

There  were two pieces of news on the Sevan group of companies during the month.
Sevan Drilling AS, a wholly owned subsidiary of Sevan Marine ASA, announced that
it  has signed  a mandate  letter and  term sheet  with DVB  Group Merchant Bank
(Asia)  Pte Ltd  and NIBC  Bank N.V.  for the  arrangement of  a USD 530 million
limited  recourse  secured  term  loan  facility.  The facility will replace the
existing  debt of the Sevan Driller rig  which includes a 1st lien bank facility
of  USD 250 million and a 2nd lien bond facility of NOK 1 billion and is subject
to  syndication and documentation.  The Company owns the existing Sevan Drilling
bond  and we believe the above news adds to the likelihood that these bonds will
be called prior to maturity.

Sevan  Marine ASA also issued a new  USD 200 million bond, the proceeds of which
were  used to refinance the existing  9.25% 2011 bond. The Company had a holding
in  this bond which was redeemed at a price of 102.5 and subscribed for, and was
allocated, an amount of the new issue.

All market data sourced from Bloomberg.


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Source: CQS Rig Finance Fund Ltd via Thomson Reuters ONE