Articles

The year 2022 witnessed persistent global financial market instability due to a combination of factors, including the aggressive interest rate hikes by central banks worldwide driven by high inflation, and geopolitical uncertainties like the war in Ukraine. These conditions resulted in a substantial decline in bond prices.

We expect many of the trends seen in 2023 to continue in 2024. Subdued inflation has given the U.S. Fed confidence in signaling rate cuts three times in 2024, which has lifted the equity markets and will come as relief to some shipping borrowers. On the other hand, a US recession, which is deemed likely, and another unforeseen global crisis could damage the economy.

If you are a shipping investor, owner, financier, or attended any Marine Money events in the past year, the discussions of tanker profitability or a “tanker party” should ring a bell. After a strong winter season, driven by the usual inherent seasonality of tanker demand but also geopolitical events, tanker shipping companies are not ready to be yesterday’s news just yet. Tanker shipping companies are determined to stay in the spotlight, and their cash balances are certainly enabling them to do so. Companies: Overseas Shipholding Group, American Shipping

This week two major U.S.-listed dry bulk shipping companies announced their plans to merge, and the result will be a global leader with a fleet of 169 ships. Star Bulk Carriers Corp. (“SBLK”), a global presence in the transportation of dry bulk cargoes, and Eagle Bulk Shipping Inc. (“EGLE”), one of the largest owner-operators of Supramax/Ultramax vessels, announced on December 11th that they had entered into an agreement to combine in an all-stock merger on an NAV-to-NAV basis. Companies: Star Bulk Carriers Corp., Eagle Bulk Shipping Inc.

Last week, Stolt-Nielsen Limited successfully completed a NOK 325 million tap issue of its outstanding five-year senior unsecured bond issue due September 26, 2028. The total outstanding amount under the bonds following the tap issue is NOK 1,525 million with a borrowing limit of NOK 1,750 million.

Ours is a remarkably complex global industry. Meeting the demands of global supply chains, safely, with respect for the women and men around the world engaged in this vital business is demanding of great skill.

Earlier this month, Hunter Group ASA entered into a three-year back-to-back charterparty on an eco-design and scrubber fitted VLCC built in 2016, with an internationally renowned counterparty. The vessel will be chartered-in at a fixed rate of $52,500 per day. At delivery, the vessel was fixed, back-to-back, on a floating index linked TD3C spot rate charter earning $62,250/day based upon the then current rates and fuel prices. Companies: Hunter Group ASA, DNB Markets, Fearnley Securities

Awilco LNG ASA also announced earlier this month that it had agreed a term sheet for the refinancing of the company’s two 2013-built 156,000 cbm TFDEs WilForce and WilPride with a major leasing company based in Asia. Companies: Awilco LNG ASA, CCB Financial Leasing

Although now a private company, Seapeak LLC still reports, albeit in a minimalist version, its quarterly earnings on Form 6-K, a requirement as its preferred shares still trade publicly. Company: Seapeak LLC

Transformative does not quite capture the magnitude of this latest stage in the evolution of this company. A few weeks ago, Capital Product Partners L.P. (“CPLP”) announced that it had entered into an umbrella agreement (“Umbrella Agreement”) with Capital Maritime & Trading Corp. (“Capital Maritime”), the partnership’s sponsor, and Capital GP L.L.C. (the “General Partner”) providing for the acquisition of 11 newbuilding LNG carriers from Capital Maritime for a total acquisition price of $3.13 billion.

Strengthening balance sheets, consolidation, tighter interest spreads, the resurgence of offshore, chaotic does not begin to describe this year, but luckily shipping appreciates chaos!

Pacific Basin Shipping Limited announced the successful closing this month of a new $150 million Sustainability-Linked three-year Senior Unsecured Committed Revolving Credit Facility (the “Facility”), representing the company’s first syndicated unsecured revolving credit facility and its inaugural sustainability-linked loan facility. Companies: Pacific Basin Shipping Limited, BNP Paribas, Citigroup, Hong Kong and Shanghai Banking Corporation, Iyo Bank, SBI Shinsei Bank, Skandinaviska Enskilda Banken

At the beginning of December, Gram Car Carriers ASA (“GCC”) reached an agreement to refinance the lease on the Viking Bravery (6,700 CEU, 2015). The company arranged a new $35 million term loan priced at SOFR +1.65% from DekaBank Deutsche Girozentrale with a tenor that matches the duration of the vessel’s current time-charter contract. Companies: Gram Car Carriers ASA, DekaBank Deutsche Girozentrale

Late last month, BW Offshore Limited (“BWO”) successfully completed a new five-year senior unsecured bond issue of NOK 1,000 million (~$90 million), carrying a coupon of three-month NIBOR + 5.00 percent. The net proceeds from the bond issue were used to partially refinance the company’s existing NOK 900 million senior unsecured bonds maturing in December (“BWO05”) and for general corporate purposes. Companies: BW Offshore Limited, BW Group, BW Energy, Danske Bank, DNB Markets

What Scorpio Tankers has accomplished in terms of restructuring and managing its liabilities cannot be overstated. From December 31, 2021 through November 8, 2023, the company reduced overall indebtedness by approximately $1.3 billion, net of new drawdowns, including about $1.5 billion of lease financing. Company: Scorpio Tankers

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Last week, Himalaya Shipping Ltd. successfully concluded a private placement of 3,117,143 new shares at a subscription price of NOK 62 raising gross proceeds of NOK 193.3 million equivalent to approximately $17.5 million. Companies: Himalaya Shipping Ltd., Clarksons Securities, Arctic Securities

This week Gram Car Carriers ASA (“GCC”) reached an agreement to refinance the debt on the Mediterranean Sea (5,000 CEU, 2010) through a drawdown of an accordion facility under the Group’s existing senior secured credit facility. Companies: Gram Car Carriers ASA,

Back in October, Altera Shuttle Tankers LLC undertook a refinancing exercise under which it closed a $340 million revolving credit facility secured by eight shuttle tankers. Increasing the debt capacity from its secured fleet by roughly $84 million, the new revolving credit facility bears interest at SOFR plus a margin of 2.75%, has a 7.5-year profile and matures in October 2028.

As a means of balancing out its newbuilding program, Odfjell SE took the next step in its fleet renewal program choosing to expand its fleet with the addition of six newbuildings through a combination of long-term time charter and pool agreements. Company: Odfjell SE