Public Equity: Paying Retail in the S&P Market

A funny thing happened on the way to the shipping crisis; the United States stock and bond market provided more than $24 billion of liquidity and saved the day – at least for those who benefitted directly. The substantial quantity of subordinated capital, which came in the form of unsecured high yield bonds, convertible bonds, common and preferred equity not only placated nervous banks, it actually spawned an entirely new chapter in the history of ship finance and marked the return of unlevered structures. But the infusion of so much outside capital has produced an unintended consequence: there is now appetite for modern, high quality asset values that those private owners looking for discounted ships have to face a stark reality: if they want quality, modern vessels they are going to have to pay the “retail” price.

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