Freshly Minted – May 13, 1999

HIGH YIELD

The high yield bond buying community has begun to take a more sectoral approach to shipping issues. CSFB was the first to jump into shipping head first and as you will see from our analysis on Alpha’s restructuring, the cheaper you get into a deal, the easier it is to find the exit.

ULTRAPETROL

Ultrapetrol has tightened to bid 86, though first quarter earnings are not out. Why? Could it be because Fortune Magazine’s bond guru John Dizard picked the shipping industry in the May 24th issue as his top pick for value. Dizard says that “the bad news is that it (shipping) is overbuilt, its recovery is uncertain and distant, and everybody hates it. The good news is that the bad news is already factored into the bond prices, and you have a pretty attractive market in buying and selling the underlying assets, namely, the ships.” Dizard’s advice: “go for the most secure paper, such as first mortgage notes.” Dizard recommends Ultrapetrol and Moran.

GLOBAL OCEAN

Global Ocean Carriers announced that it has retained Chase Securities to explore strategic alternatives, “which could involve a possible restructuring of its 10-1/4% Senior notes.” Global reported a net loss of $13.5 million for fiscal 1998. Bonds have tightened on the news. Is the market saying that shipping bonds are worth more “dead than alive”? Global’s move to appoint Chase comes as little surprise as Chase arranged a $250 million syndicated facility for Tsakos controlled Oslo-listed MIF in the spring of 1998. MIF, which is an owner/operator of modern tankers, is currently exploring a possible stock listing in the US.

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