EVER the epitome of pinstripe suited prudence, shipping bankers have been markedly more reluctant to hand over the readies during the last two years.
The move to higher spreads and tighter conditions was well in train before the failure of Lehman Brothers, and the recent collapse in ship values underlines that shipowners are not the most desirable of borrowers right now.
Several former players have reputedly quit the shipping sector altogether. Others are looking to sell shipping portfolios, regardless of whether or not the loans are performing.
That is understandable from their point of view, but where does that leave the industry that constitutes the lifeblood of world trade?
Well, it leaves us with a 20% funding shortfall of the order of $20bn-$30bn for 2009 alone, if you want to put a number on it. The gap could reach 80% by 2012, on some brokers’ estimates.
That is why it is unsurprising to read of increased shipowner interest in the bond market, with big players such as Eurovnav, Evergreen and now Maersk all issuing paper. Note that all of these are household name outfits to Lloyd’s List readers, not the sort of start up outfits that characterised the junk bond boom of the late 1990s.
Yet Maersk was offering a healthy coupon of 4.9%. No wonder the offer was more than six times oversubscribed. It would be arrogant for the bankers to assume that, once the next shipping cycle starts, traditional customers will be queuing up for their services.
