Financing for shipping is returning following the earlier exit of several banks, especially European banks, since the post-Lehman crisis, and loans to shipowners are expected to increase beyond the $56bn seen in 2013, according to Standard Chartered Bank.
Shipowners are seeing loan options being made available not just from the usual international banks, but also from regional banks, export credit agencies (ECAs) and even private equity funds, noted Nigel Anton, global head of shipping finance at Standard Chartered.
“What we have seen in the last three years is a whole range of new financial players, very much led by Chinese banks, and on their tails you see leasing companies and ECAs in particular China and South Korea coming into the market to fill the (financing) gap. There is also a growing number of regional banks especially in Singapore, Malaysia, Abu Dhabi and Qatar, that are financing the local players,” Anton said.
“And the last that we have seen over the past six to 12 months is the rise of private equity,” he pointed out.
In 2007, a total of $94bn was lent to shipping. After the global financial crisis, that amount fell to just $38bn in 2010. By 2013, lending to shipping rebounded to $56bn. “I predict that this year's amount will be even higher,” Anton said.
He added that private equity was on “no one's radar” back in 2007. Last year, shipping received about $9bn from private equity and the amount is similarly expected to increase this year.
“Financing in the shipping market is definitely back and the participation by private equity is recovering. In particularly private equity has given a boost to the ordering book in traditional shipping segments of the dry and wet markets,” he said.
However, Anton cautioned that returns in the shipping market would generally take a longer period of time and it is an industry that investors cannot expect to enter and exit quickly. The efforts made by financial institutions on scrutinising owners for their credibility are more important amid the prolonged downturn of the shipping industry due mainly to the severe overhang of tonnage.
Shipowners are seeing loan options being made available not just from the usual international banks, but also from regional banks, export credit agencies (ECAs) and even private equity funds, noted Nigel Anton, global head of shipping finance at Standard Chartered.
“What we have seen in the last three years is a whole range of new financial players, very much led by Chinese banks, and on their tails you see leasing companies and ECAs in particular China and South Korea coming into the market to fill the (financing) gap. There is also a growing number of regional banks especially in Singapore, Malaysia, Abu Dhabi and Qatar, that are financing the local players,” Anton said.
“And the last that we have seen over the past six to 12 months is the rise of private equity,” he pointed out.
In 2007, a total of $94bn was lent to shipping. After the global financial crisis, that amount fell to just $38bn in 2010. By 2013, lending to shipping rebounded to $56bn. “I predict that this year's amount will be even higher,” Anton said.
He added that private equity was on “no one's radar” back in 2007. Last year, shipping received about $9bn from private equity and the amount is similarly expected to increase this year.
“Financing in the shipping market is definitely back and the participation by private equity is recovering. In particularly private equity has given a boost to the ordering book in traditional shipping segments of the dry and wet markets,” he said.
However, Anton cautioned that returns in the shipping market would generally take a longer period of time and it is an industry that investors cannot expect to enter and exit quickly. The efforts made by financial institutions on scrutinising owners for their credibility are more important amid the prolonged downturn of the shipping industry due mainly to the severe overhang of tonnage.