The emergence of Chinese lessors coincided with the retreat of Western shipping banks after the 2008 financial crisis. Today, charting a new course may be more vital than ever, given the mounting market and geopolitical headwinds
While shipping companies traditionally reinvested profits in expanding and modernising their fleets, listed owners have increasingly been allocating their capital towards debt repayment and share repurchases in recent years amid strong cashflows, regulatory uncertainty and a lack of yard slots
Banks are aligning their lending capacity to the newly increased net zero trajectory for shipping. The natural conclusion of this process will be a reduction in shipping finance from banks. Capital will increasingly only flow in the direction of those companies with the ‘right’ decarbonisation strategies
Market has changed in past 12 months, with some borrowers looking to buy companies rather than vessels
Private equity providers of debt in the maritime space are sandwiched between banks lending to shipowners with modern assets and unsecured cashflows; and alternative lenders focused on older tonnage and aggressive leverage to get deals done
When it comes to bank lending for shipping there is still a dramatic gap between what is needed and what is being offered. The global fleet has increased 40% over the past 15 years, but bank lending has reduced by 40% during the same period. This special edition of the Lloyd’s List Podcast convenes a panel of ship finance specialists to offer the expert view on what is happening to shipping finance
‘As a shipowner, is it really your business to speculate on rates, or is your business to run vessels and hedge that risk and to keep it flat, or eliminate that risk so you don’t have to think about it?’ asks Hauge
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