Shipping and Capital Markets: Back to the Future

by Alan Ginsberg

As presented to Hong Kong Shipowners on November 20, 1997 at The American Club

A Brief History
If you asked me a year ago whether I believed that the U.S. capital markets would have a significant impact on the shipping industry, I probably would have said “no.” I would have argued that the shipping industry’s financial record with investors was still too spotty. For every Teekay there was an OMI; for every Anangel American there was a lingering B+H deal. Only a handful of companies, most with billion dollar balance sheets, had been able to access the public debt markets. At best, shipping was holding its ground in the capital markets.

As late as this past winter, I saw the successful Knightsbridge Tankers equity offering as more of a refinement of the Lazard Freres’ innovative Nordic American Tankers warrant deal than as representative of any broader trend. On the debt side, I watched Cambridge Partners copy the First International Petroleum Transport’s two tranche deal with Shell with their own bareboat charter deals – first with Chevron and now with British Petroleum – but I was still unconvinced that investors fully understood the risks involved with unsecured second tranches, choosing to focus solely on the AAA credit rated secured first tranches.

This is only an excerpt of Shipping and Capital Markets: Back to the Future

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.