What’s a Ship Worth? In This Instance, Only a Mathematician Can Tell You!

How do you know when a covenant, the LTV in particular, has been breached? The global financial crisis aided and abetted an economic downturn, which in turn cratered shipping demand and rates. Normally, values tend to follow rates but in this instance they did not. Borrowers had sufficient liquidity to repay debt and banks had no interest in foreclosing. These were uncontrollable events and owning or moving assets to others, while absorbing the costs accomplished nothing. A more jaundiced view might suggest that banks did not want to see a floor established on values, as it would crater a veritable

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