ZT--Cosco falls on worries over Sevan rig orders
Shares of Singapore-listed Chinese shipbuilder Cosco Corporation (COSC.SI) fell as much as 3.5% on Friday, weighed by concerns its rig orders could be hit after Norway oil services group Sevan Marine (SEVAN.OL) faced financial difficulties.

At 10:46 a.m., Cosco shares were 2.5% lower at $1.95 with over 19.6 million shares changing hands.

Cosco said in March it had signed an agreement to build two rigs worth US$1.05 billion ($1.3 billion) for Sevan Marine’s unit, Sevan Drilling.

Sevan Marine said on Thursday it had cancelled its planned US$275 million rights issue and was seeking restructuring as it could not meet its project liquidity and financing requirements.

Jan Erik Tveteraas has also resigned from his role as board member for Sevan Marine and chief executive of Sevan Drilling “for personal reasons”, Sevan Marine Drilling said on Thursday.

DBS Vickers said in a report that the news raises concerns over default risk, cancellation and delay of contract award to Cosco Corp.

“Technically, expect weakness in the near-term due to this negative news, following the minor rebound from $1.89 to $2 in recent sessions,” DBS Vickers said.

However, the brokerage said the risk of Sevan’s letter of intents not being exercised should be offset by buoyant offshore outlook and other non-Sevan projects under tender. It maintained its buy rating with $2.86 target price on Cosco.