Tough financing market does little to deter hungry Greek owners

With the traditional avenue favoured by Greek owners being bank finance to support their ambitions being harder to get these days the challenge to get funds many have looked at the available, alternative sources, albeit they are expensive.

There is no question Greek owners have, and continue to, take advantage of the relatively poor markets and low level prices to acquire young secondhand vessels, with Japanese built tonnage the main target.

In 2017 secondhand purchase costs compared favourably to those of newbuildings and the acquisition of secondhand vessels rose 30%, from about 200 the year before to 260. "The Greek orderbook fell from 502 to 326 vessels, as owners preferred ‘propellers in the water’ rather than longer term deliveries in anticipation of improving market conditions,” said Petrofin.

It goes on: "With dry bulk share performances recording healthy rises and with market projects turning to positive the public markets are expected to provide increasing capital to Greek shipping, in 2018. Further, alternative sources of finance carry a higher cost and the options available for the smaller owner are fewer and consist of the smaller banks that have entered the market with low advance ratios and higher margins or Chinese leasing or act finance at costs that are often in the 10% plus area.

"Higher finance cost represents a substantial risk for owners, especially in light of rising of US dollar interest rates and requires a robust rise in vessels’ cash flows [and values], to justify itself. The challenges to Greek shipping remain the technological, regulatory, compliance and financial. However, the key to meeting these challenges and continuing with the remarkable growth and quality story lies in the performance of the shipping markets.”

Petrofin concludes: "A mood of confidence is prevailing in Greek shipping that the huge investment decisions and commitment in shipping will bear fruit in the next few years. As such, it is expected the growth of Greek shipping shall continue unabated, certainly over the next few years."

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