The Turkish Shipping Miracle

Shipping as an industry has been booming over the past three years. Who would have expected that China’s entry into the WTO and Beijing’s winning bid for the 2008 Olympic Games would have been the stimulus for these golden years for shipping? Not only this, it has coincided with a period of historically low interest rates and a deluge of liquidity in the world’s financial markets. Put together a surge in demand for raw materials and energy and cheap money and that spells jackpot for ship-owners.

Additionally the amount and types of financial structures available to ship-owners has grown substantially. As has the number of finance providers. Bank debt, always the cornerstone of shipping finance, is more abundant than ever and pricing and terms have been squeezed as transaction sizes increase and credit quality improves, particularly in respect of vessel ages and corporate structures. In some markets, Greece in particular comes to mind, many larger owners, and smaller owners who wanted to expand rapidly, have been lured by the capital markets. A number of shipping companies listed on the NASDAQ and NYSE from end 2004 and through 2006. Companies were able to price at a premium, even to the already high asset values, and there was plenty appetite from shipping investors. Shipping listings were also successfully completed in London, Singapore and last year in Dubai. Other structures also became prevalent with German KG and Norwegian KS structures (similar structures which are in essence tax breaks to high net worth individuals investing in shipping) enabling ship owners to do off-balance sheet structures involving the exclusive use of vessels without ownership obligations.

The question posed in this article is whether all these structures and terms have become available also to Turkish shipowners, and whether all Turkish owners, regardless of size and fleet composition, can access this finance.

This is only an excerpt of The Turkish Shipping Miracle

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