Whew…..that was the hard part. Now, I will try to share the market’s moods, from mid October, discerned from last week’s big Marine Money event in Manhattan. Happily the conference organizers had created a room with a big screen to see the Powerpoint shows, electricity so my batteries did not run down, a good wireless connection, and seats, for folks like me who are permanently joined at the hip with laptop computers. So, I was able to do some writing. Even though the sky had supposedly fallen on financial markets, along with all those dominoes, attendance at the “Marine Finance Forum” (now in its ninth year), held at New York’s Harvard Club, was once again standing-room only. Thanks, Marine Money team, for creating the VIP room this year, and letting me hang out there.

Though this conference, scheduled to coincide with a big Coast Guard dinner event, has a specific U.S. focus, the influence of the broader financial currents was readily apparent in the day’s speeches and presentations. Attendees include many more asset based lenders or partnership investors, contrasted with Marine Money’s big June events, which tend to draw international bankers and listed companies.

But nobody could avoid talking about the precipitous slide in drybulk rates and the stale or spoiled L/Cs. During October, hires and $/tonne voyage rates in freefall across the entire drybulk spectrum, led by Capesizes but filtering down into the Handysizes. Rather than providing an engine for growth, Capesizes, highly dependent on China’s insatiable ore fixing, have seized up (much like the credit markets that are now seen as unable to fund future vessel orders). A sizable portion of drybulk’s downdrafts have have occurred since mid September, after the market was already weakened in early September as the “post-Olympics bounce” did not happen. The BDI stood at 4900 as Lehman was unfolding; at this writing, it’s below 1500. Its zenith, last Spring, brought it to around 11,000.

Veteran debt financiers were musing, in the coffee breaks (and at an after party at the very chic “M” Bar across from the conference venue) about the state of the inter-bank market. More specific to the shipping industry are questions about whether banks would be re-aligning their portfolios of existing loans. Randee Day, a banker during the turbulent workouts of the1980’s, alluded to reports of banks actually selling their loans at discount- possibly to re-arrange their portfolios to free up capital for lending at the higher spreads now prevailing, or, potentially, as part of an exit from the business.

During the main event, rather than in the hallways or around the bar, there were ominous predictions of doom and gloom. While these speeches were being given, a news item regarding a big time charter operator, Industrial Carriers Inc (ICI), was just hitting the wires. The financial difficulties of ICI quickly became a public event because at least one ICI in-chartered vessel (from several dozen chartered in) is owned by a listed entity. Star Bulkers had put its Star Beta onto ICI for three years at $106,000/day near the height of the market. Today, if a three year charter were done on a Capesize, it might be worth a fraction of that amount according to recent broker estimates though Star Bulk is trying to work out various solutions. Maxim Securities shipping analyst, Charles Rapinski, explained that he was hearing from investors who were concerned about risks of charterer defaults, even where listed names had substantial earnings visibility going forward. He offered that as explanation for the investors’ seeming indifference to whether shipowners’ charter books were full, or not. Speaker Ted Petrone pointed out that Navios insures its charters. Eagle Bulk was not at the conference, but they are also insuring their hire inflows. Hello out there??? Anyone??? Buyers???

Several Marine Money conference speakers alluded to the huge orderbooks, especially in drybulk, that will likely not gain financing. Commercial bankers described a market where deals are being done, on a conservative and selective basis, bi-laterally rather than through a syndicate of banks. Anecdotally, our channel checks provide a similar picture in the world of offshore equipment, compounded by dips in perceptions of forward oil prices (not much different from perceptions of major dips in drybulk ton-miles with a major recession). Maybe it’s better to wait rather than plunge ahead with projects- that’s a common theme across markets.