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The puzzle of German finance and Greek shipowning

The puzzle of German finance and Greek shipowning
The margin of difference between the health of Greek shipping and Greece generally and Germany and Greece and Greek shipping and German shipping has been underlined again in recent days.

With Greece’s political leadership battling with the Eurogroup, with Germany to the fore, to secure a new economic life jacket, the relative wellbeing of Greece’s shipping community as opposed to Germany’s was clearly illustrated by the deal for the sale of 14 oceangoing vessels by German bank HSH Nordbank AG debtor companies to the Piraeus-based Navios Group.

German banks in their efforts to clean-up their massive portfolio of bad shipping loans, are turning to Greek interests for help.

HSH is just one of the banks ready to do deals with Greek ship owners, though deals being arranged by other German lenders pale in significance with its business with the Angeliki Frangou-led Navios.

Though the latest deal is still to close, Navios is set to seal a second deal to acquire distressed vessels from the portfolio of the German lender. HSH Nordbank said 14 ships “at serious risk of insolvency” are being bought by Navios to go with a portfolio of 10 ships acquired from HSH in 2013.

This second deal will be cemented with a new joint venture, Navios JV, for a $14m investment and assuming the participating HSH loans on the seven bulkers and seven container vessels, with an average age of four years involved.

The financial structure of the transaction is seen as particularly attractive for Navios. Navios will finance 60% of the value of the vessels, secured against the vessels with a first-priority mortgage. "Navios JV will receive an annual preferred return on its $14m investment and a priority return of this investment upon the sale of vessels," said Navios.

To mid-April Greek owners have so far this year acquired 37 vessels, including the Navios 14, from German operators, all but 10 of them container ships, usually involving distressed sales by the once mighty German container fleet. These vessel average 10 years old and excluding, the latest Navios deal, have been acquired for around $355m.

Indeed, Navios kicked-off 2015 with the purchase of the 2011-built 13,092teu MSC Cristina from ER Sciffahrt for $147.8m with a time charter for 12 years at $60,275 a day. In a statement the NYSE-listed Navios said the contract includes an option which allows Navios to terminate the agreement after seven. The platform believes the charter-free value of the ship to be around $85.2m.

Though not all sales by German owners are bank-pushed but the fact Greek-owned shipping companies are buying German ships is proving hard to swallow for the German public.

Analysts say the German public finds it hard to understand many German shipping companies have been brought to their knees by the shipping crisis, inflicting huge losses both on themselves and their country’s banks while the shipping companies of hard-pressed Greece continue to grow.

This is also a puzzle for most Greeks.