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The Week in Review – January 10, 2008
Two thousand eight has been off to a fairly slow start as financial transactions go, and that’s not just in shipping. The graph below shows a dramatic drop-off in US M&A volume during the first week of the year, making 2008 to date the slowest year this millennium. As far as the credit market official shipping numbers for 2007 have not yet been released, but we do know that, credit crunch aside, according to Dealogic global syndicated loan volume was up 20% in 2007 to $1.77 trillion, from $1.28 trillion in 2006. However much of this success can be attributed to the first half of the year, which saw a record $1.09 trillion raised. Issuance in 2H07 actually fell be 38% versus the same period in 2006. What’s more, there were quite a few deals in the pipeline when the credit crisis struck that still managed to get done before the end of the year. Without an economic upturn early 2008 could see issuance fall further. However weakness does not go across the board; according to Dealogic figures the Asia Pacific region (ex Japan) was up 41% over 2006, with Australasia in particular up 62%, and Middle East volume was up an impressive 90%. Continue Reading
The Week in Review – January 3, 2008
Two working days into 2008 the ship finance markets have been reasonably quiet. We would encourage those who haven’t yet to take the time to nominate their favorite deals for a Marine Money Deal of the Year Award at http://tinyurl.com/3yqewn. Being public, however, while having its fair share of costs and drawbacks,in these days of tighter credit continues to prove its value in terms of availability of capital. FreeSeas is a perfect example of the opportunities public status affords. Since netting $97 million in an October equity offering, the company has moved forward to acquire two 24,000 dwt dry bulk carriers, built 1997 and 1998, to be delivered in February and March of 2008 for $77 million. The deal was financed with a combination of cash on hand and bank financing and uses only about half the company’s available liquidity so further acquisition can be expected in the near term. The deal brought FreeSeas’ fleet from five to seven vessels and increased its tonnage by approximately 33%. At seven vessels with an average age of 14-15 years, it represents significant progress from where FreeSeas was just a year back, with two vessels built in the 1980s. Continue Reading
Pegasus Shipping: Facing Down Adversity
According to Pegasus, the purpose of the bond offering is to take advantage of the characteristics of the North-South American Trade Routes (principally the increasing U.S. demand for oil, coupled with the suitability of panamax tankers for this dirty trade and barriers to entry created by environmental regulations necessitating increasingly higher operating standards). Additionally, Pegasus states that it benefits from strong relationships with major charterers and operates a well-maintained and well-managed fleet. Continue Reading
The Tortoise Or the Hare?
By George Weltman
The beginning of the year is always an exciting time for us here at Marine Money. We get to look back and praise the successes of the industry, a favorite pastime, in particular, of the industry’s number one and two fans, our Chairman and President. First, we award the deal doers in our February/March issue and then we rank the shipping companies in the spring. Of course, our enjoyment is somewhat tempered by the volumes of work with which we are faced. Given the theme of this issue we thought it would be appropriate to look at our rankings data as one of the objective measures of achievement as opposed to crass cash accumulation. To a small degree, our rankings methodology has been questioned in some quarters, particularly recently, in that the new entrants have so quickly outshone the long-term players. So taking nothing away from our recent winners, we wanted to take a longer-term perspective of how to measure success. We termed 2005 the “Year of the IPO” in our 20th Anniversary issue, and that year also becomes the dividing point between what we term before and after capital markets or the divider between old and new companies. The 2006 Rankings were the transformational point as the Class of 2005, which totaled 16, entered the competitive ranks. These new entrants represented almost 20% of the entire data set. To get a picture of how the rankings have evolved along with the capital markets we have included Figure 1, which shows the annual additions to the ranking database. Continue Reading
XRTC: Catalysts for Change
No one is quite as up on the market as those who spend their lives linking up players and providing market information.We thus found our conversation with George Xiradakis of XRTC to be of particular interest. XRTC is a Piraeus-based firm that lends, arranges transactions such as lease deals, and does consulting work for institutions looking to know more about the Greek market. In particular, XRTC acts as consultants for French bank Natixis, but they have relationships with a variety of other banks as well. The firm also provides advisory services in specialized sectors such as ferry, and publishes reports on this sector from its R&D office in Chios. Continue Reading
Constant & Constant: The More Things Change
Jeremy Watson recently left Watson, Farley & Williams’ Greek office for a new role one floor below. He has joined Constant & Constant as Global Head of Shipping based in their Piraeus office. The firm may be different, but many of the clients and much of the business is the same. When we spoke to Mr. Watson in late October, he noted that the credit market was impacting his clients’ business, but that there was still plenty of capacity in the market and his clients were finding other banks to take their deals. Continue Reading
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