Does the Time Charter Market Need Credit Analysis?

“Hold on, let me get this straight,” a wide-eyed investor said to us the other day as we were explaining the current conditions in the dry cargo markets. “You’re telling me that some companies are renegotiating charter rates downward without actually going bankrupt?” he asked in disbelief.

“Correct.”
“And that other companies are canceling contracts to buy ships without the equity of those companies feeling the pain first?” he queried quizzically.
“Sort of,” we said.
“Then may I ask I rather obvious question?”
“Shoot.”
“Does anyone in your industry do any credit analysis before entering into a multi million dollar contract with a counterparty?”
“In a rising market, there is no need for credit analysis,” we said sarcastically.
“But how do you price the credit risk, and default risk

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