Editor: Transparency Makes Better Shipping

For certain it has been a sobering year for shipping markets and for the whole world. The confluence of events that really started with the beginning of the recession in the US, highlighted by the travesty of September 11th and punctuated by the “War on Terror”, Enron, the analyst fiasco and even shipping share ACLN (the first forcibly de-listed NYSE company in 27 years), has made the whole appearance and feel of the world completely different. One of the better offshoots of the financial/business headaches is the growth in importance of transparency in the shipping business.

The day this note is being written NIB Capital in the Hague acknowledged that it was securitizing $670m in shipping debt in five classes rated from S&P AA+ to BBB. Yes they have some investment grade debt! Marketing started on June 6th and is to target non- shipping institutional investors in collateralized debt. NIB notes that the move is to diversify risk so that it can grow its $2 billion shipping book further with the $670m constituting about 5-6% of the total credit portfolio of the entire bank. This Editor finds it a very positive move for any bank to do such and the hardest thing in the process was likely structuring the deal so that the rating agencies would even look at it. Not that the loans were or are bad, but the process must have been grueling.

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