CQS Rig Finance Fund Ltd (UK) – Monthly Shareholder Fact Sheet

Monthly Shareholder Fact Sheet
CQS RIG FINANCE FUND LIMITED

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 January 2010 is now available on the Company’s website and includes information on the top ten investments and outstanding borrowings:
www.cqsrigfinance.com

Having started the year above the USD80 mark, WTI crude oil weakened during January, ending the month around USD73 per Barrel. Generally, major equity and credit markets began the year with a firm tone, however ended weaker after measures to curb bank lending were announced in China and over concerns about some European countries’ fiscal positions.

In the drilling sector, the midwater segment has been the winner so far in 2010 with nine fixtures announced. Although many of these have been of a short term nature and at modest rates, the activity bodes generally well for greater utilisation. With increased utilisation, day-rate increases should follow and, with no new-build rigs on the way, the midwater outlook is considered to be improving. This may not impact any of the Company’s positions directly but is positive for the sector as a whole.
The Company’s NAV during the month also benefited from rising bond prices in response to positive news flow and increased market demand for bonds.

Following the completion of the refinancing of Marine Subsea AS, the bonds were marked up significantly during January, albeit on limited trading volume. Gains were also made on the holding in Sevan Drilling as the bonds traded up following the successful completion of construction of the 6th generation UDW drilling rig. The unit is currently in transit from Singapore to Brazil where it is shortly due to commence a six years plus charter with Petrobras in the pre-salt area of the Campos basin. The positions in Skeie Drilling, Production AS and Rubicon Offshore were also marked up, although there was no significant news on these names.

As indicated in last month’s commentary, the FRN notes issued by Petroprod Ltd were partially redeemed during January and cash was received by the Company. The distribution by the Bondholders’ Trustee equated to a c. 21.5% recovery on this position which was slightly higher than expected. No further material recovery is expected on this bond.

All market data is sourced from Bloomberg.

/HUGIN /Source: CQS Rig Finance Fund Ltd /LSE: RIG /ISIN: GG00B1GVK032