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Bankers like tankers, Greek shipowners prefer bulkers

Bankers like tankers, Greek shipowners prefer bulkers
Bankers like tankers, but Greek shipowners favour bulkers. In a clear reflection of their view of the shipping market banks are more inclined to finance the acquisition of tankers, as opposed to bulk carriers.

At the same time, Greek shipowners, renowned for reading the market, are still very keen to invest in dry bulk carriers, according to a survey by a leading Piraeus finance and business consultant.

XRTC Business Consultants in a recent survey of 150 Greek shipping companies, both listed and private, and 50 Greek and foreign banks found just 12% of the banks would finance dry bulk carriers. Among Greek shipping companies 39% of them opt for bulkers, with 28% looking to invest in the tanker market.

Author of the survey’s results, XRTC’s head of investment banking, Dimitris Dimitriadis, said his team found the three main shipping markets - dry bulk, tankers and container ships - accounted for 80% of shipowner preferences, while the LNG / LPG sector accounted for most of the remaining 20%.

Some 59% of shipowners are looking to finance both newbuildings and second hand vessels, with only 26% showing a clear preference towards secondhand ships. Banks to the tune of 65% are looking to finance both new and second hand ships, but 23% of banks are focused solely on newbuildings.

When it comes to Greek banks only, two-thirds of them are looking to invest in secondhand vessels.

Both owners and banks see tonnage oversupply as the biggest peril facing global shipping. Some 73% of owners believe oversupply is the top threat, and “acting as a big obstacle towards a healthy improvement of most major markets” while 20% are concerned about the prospects of the global economy. Banks are also primarily concerned by tonnage oversupply (63%), with 30% seeing the world economy as having a negative impact on shipping.

There is, however, a gap in expectations between owners and banks when it comes to financing. XRTC found 85% of shipowners are looking to get financing of 50 - 70% of a ship’s value, with 51% falling into the upper 60 - 70% bracket. But 82% of banks are unwilling to lend more than 60% towards a ship’s value, with just 18% prepared to finance up to 70%. XRTC says the difference reflects the fact banks want less exposure to new shipping financing.

Greece's debt crisis doesn’t seem to have had a significant impact on a shipping company's access to financing. Banks believe shipping companies can be given new loans, but notably banks from Germany, China and France appear to be more wary when it comes to the general economic situation of Greece.

Financing costs are expected to remain unchanged during 2015. XRTC found 47% of owners believe costs will remain unchanged, while 38% expect them to fall, as opposed to 15% of owners who believe financing costs will increase.

When it comes to banks, 59% stated costs would not alter in 2015, while 12% think they will be higher. Importantly, 29% of banks say 2015 will see a reduction in their margins in the shipping loan market.

When it comes to the duration of shipping loans, a clear difference appears. Owners are looking for longer loans, while banks for shorter. Over 60% of owners are looking for a loan duration of more than 12 years, with only 17% ok with loans less than 10 years. By contrast, half of the banks prefer loans with a duration of less than 10 years, and only a third are willing to grant loans with a duration of more than 12 years.