2007

It’s been an exciting week in the ship financing markets, with the confirmation of Genco’s $1.1 billion acquisition the highlight but followed closely by a sizeable joint venture set up by Fortress and Clipper. Following soon after the Quintana/Glitnir and Tufton/Oldendorff sale leaseback deals it appears that global ship finance activity is presently focused around the dry bulk markets, which have left behind all expectations for where their peak would be. However certain deals have rounded down market values for vessels, suggesting that some key players are expecting that the market has peaked but will land softly and profitably. There is therefore great excitement about Peter Georgiopoulos-led Genco’s decision to invest in the capesize sector at an average price of around $122 million per vessel and this has led to a rally in the dry bulk equity market in the US.

In other news Rand Logistics announced that it had raised $17.8 million in cash through the exercise of warrants while StealthGas raised $122 million through a Citi and Cantor led equity offering with the shoe still outstanding. Notably ship finance is not all a bed of roses.While reports are that a great deal of loans are in progress or near closing, we hear more and more that a push back in the banking markets is beginning. Between the sub prime mortgage problems and increasing difficulty in selling LBO debt, liquidity is gradually though not surprising falling to lower levels while reports suggest that debt pricing will begin to crawl upwards. This could result in a change in the overall landscape for shipping equities as investors seeking yield may again feel that the debt market is able to provide it. Still, financing seems widely available to qualified parties, as demonstrated by Genco’s securing a $1.4 billion facility to fund its acquisition, Horizon’s refinancing that is currently in the market, and the expected close of Chembulk’s debt issue in the coming week.

This is only an excerpt of The Week in Review – 07/19/2007

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