CQS RIG FINANCE FUND LIMITED
Monthly Shareholder Fact Sheet
CQS Rig Finance Fund Limited (the "Company"), a closed-ended investment company
incorporated in Guernsey, is pleased to announce that its Monthly Fact Sheet for
December 2010 is now available on the Company's website (www.cqsrigfinance.com)
and includes information on the top ten investments and outstanding borrowings.
Credit and equity markets moved higher in December in the run up to Christmas.
The S&P 500 Index posted impressive gains of 6.5% over the month to make new
year-to-date highs. Better-than-expected economic data and earnings forecasts
fueled optimism for stocks which rose to pre-Lehman bankruptcy levels. The oil
price followed a similar trend rising 8% to close the year around the $91 per
barrel mark. The Company's final NAV per share closed up 1.2% at the end of
December 2010 at 28.25 pence against 27.78 pence at the end of the prior month.
This was reflected by a number of small gains across several positions but there
were no stand out large moves.
It was a relatively quiet month for trading due to the run up to the holiday
season. There were, however, some pieces of news relevant to the portfolio and
some general research views on the 2011 outlook worth mentioning. Barclays
Capital, in 'The Original E&P Spending Survey' released during December,
predicted an 11% increase in 2011 global Exploration & Production spending to
$490bn, driven by investments in Brazil, South-East Asia, the Middle East and
North Africa. In addition, CNOOC Limited, one of China's largest state-owned oil
companies, announced that it plans to spend almost £100bn buying foreign oil
groups and investing in new production over the next five years (Bloomberg).
This, coupled with the continuing wave of new-build rig orders, bodes well for
the sector in 2011.
Turning to news flow on the portfolio names, Vantage Drilling Co was awarded a
contract for its premium jack-up unit 'Topaz Driller' for the campaign in the
Malay Basin starting in Q3 2011. The work covers up to three wells with a
potential duration of up to seven months per well. In addition, Vantage
management contracts for the two SeaDragon semi-submersible rigs under
construction at Jurong shipyard were terminated following the sale of these
vessels to Seadrill.
The harsh environment, mid-water rig 'COSL Pioneer' secured a one year (+ four
year options) contract with Statoil ASA in Norway. This rig forms the security
for the Offrig 9.75% bonds held in the portfolio.
Following problems with the risers and BOP in October and November, RDS Ultra-
Deepwater Limited announced that it had operated its rig satisfactorily during
December with 88.7% of uptime.
There was a new bond issue during the month as Sevan Marine ASA completed a
placement of NOK700m. The bond has a term of four years, carries an interest
rate of 14.00% and is callable at 107. The Company subscribed for, and was
allocated, a small amount of the new issue. Sevan also announced that it had
secured commitments, subject to documentation and conditions precedent, for a
$480m Senior Debt Facility for the Sevan Driller unit. Net proceeds will be used
to repay the existing 1st and 2nd lien financing on the Sevan Driller and for
general corporate purposes.
For further information, please contact:
Lynette Le Provost
Kleinwort Benson (Channel Islands) Fund Services Limited
Director, Corporate Finance
020 7012 2000
All market data sourced from Bloomberg
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Source: CQS Rig Finance Fund Ltd via Thomson Reuters ONE