Shipping Is Back, And The Finance Sector Knows It – News Analysis
[London, October 2018] – The ship finance sector has witnessed a few difficult years but it is once again attracting big banks back into the maritime industry. With volatility in asset prices posing a unique and challenging environment, SPI Marine’s asset desk incorporates market knowledge, market research and S&P services to help industry players in the chemicals and edible oils segment successfully buy and sell ships, arrange time-charters, contract new buildings and dispose of older tonnage.
MARKET SENTIMENT IS IMPROVING
Demand for chemicals tracks GDP and with current global economic growth, demand for shipping is expected to continue rising. The key point is, demand for tankers is expected to increase, and based on the current orderbook, the chemical fleet is potentially going to start shrinking by 2021, further exacerbated by scrapping. With this slowdown in fleet growth in mind, improved sentiment has begun restoring some cautious optimism among banks and investors in ship finance.
For some financiers, it will represent a chance to grow and increase their market share, while for others it will be an opportunity to reduce and off-load loan portfolios.
Even though there are mounting fears over protectionism, an escalating trade war between the US and the rest of the world, the US withdrawal from the Trans-Pacific Partnership or the re-negotiation of the North American Free Trade Agreement, demand for shipping will still be prevalent, just that trade patterns may change.
HSH Nordbank, once one of the world’s leaders in ship finance, suffered a setback after the global financial crisis, however understanding the cyclical nature of shipping they are jumping back in with both feet, and are looking to reshape its ship lending business now that the industry is regaining some strength.
Not wanting to miss out, Centaurus and Austrian bank BAWAG, who was acquired by U.S. firms Cerberus and J.C. Flowers, and investors GoldenTree, is seeking to buy performing loans from other financial institutions and is looking at high-quality business. According to an article in Reuters, the bank has an annual budget of €700M until 2022 to invest in new shipping businesses, including buying loans from other banks.
As HSH Nordbank readies itself to make a renewed strike into shipping, another big name in ship finance is taking measures of its own. Germany’s Deutsche Bank has recently said that they intend to keep a foot in the shipping finance business. After restructuring their portfolio, the bank will maintain a performing shipping book and start concentrating on ship finance areas where it will continue to add value to clients.
Other players are also starting to benefit from the first signs of the recovery in the shipping market, which was also reflected at the Marine Money 2018 conference in New York.
As HSH Nordbank and Deutsche Bank, are historically among the big traditional shipping banks who really understand the cyclical nature of the business, and if they’re getting back into shipping, others won’t want to miss out.
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