“Fundraising will continue to be the biggest challenge that shipowners will have to face during 2014,” Hashim, managing director of Precious Shipping, said in the company’s annual review.
The review noted that traditional shipping banks were either unloading their portfolios or exiting ship finance completely. “However, non-traditional lenders have, and will continue to come, to the rescue of shipowners,” Hashim said.
A major source for many in recent times has been from equity and debt markets. In an apparent reference to companies such as Scorpio Bulkers the report commented: “We have seen very large sums being raised, at times by people who have still to have a single ship in the water. The way these markets function continues to amaze us!”
It was noted such sources of finance tend to be much more expensive than traditional lending and can open or shut very quickly depending on market conditions.
Non-traditional lending can also come from local banks with which shipowners have a corporate relationship, but have less experience in shipping, and usually slightly more expensive than financing from shipping banks. Precious Shipping has such relationships itself with the likes of Bangkok Bank.
The avenue of securitization of future cashflows was seen as likely to remain dormant due to the charter party renegotiations and defaults seen in recent years.
In a bleak warning Hashim said only the very strong publicly listed and cash rich companies would be able to attract the finance available. “The smaller, non-listed ship owners will be hung out to dry and will have to basically use much more of their own cash to get any business done.”
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