Gleanings from Capital Link

Following the CMA, Capital Link held its 3rd Annual Invest in International Shipping Forum at the Metropolitan Club, which was overflowing for much of the day. There were general presentations, panels as well as company presentations. The following were our main takeaways from this forum.

The container sector has been the hardest hit and so we listened with great interest to that panel led by Ken Hoexter of Banc of America Securities-Merrill Lynch. The panelists included Gerry Wang of Seaspan, Aristides Pittas of Euroseas and Dimitiri Andritsoyiannis of Danaos. The collapse of the market is attributable to simple supply and demand. Overbuilding joined with reduced demand resulting from a slowdown in consumer buying. Mr. Wang believes this is a 12 to 18 month problem with 2012 to 2014 being good years. The lines will survive as they exercise self-help by utilizing alliances, like the airlines. Slot sharing is not as effective as filling a single ship instead of having two partially filled. Mr. Andritsoyiannis espoused the certainty that globalization will continue and that the containership is the only way to efficiently move finished goods. Mr. Pittas reminded everyone that it is a cyclical business and the good market will return. He plays the market more than his fellow panelists. He operates his smaller ships on shorter-term charters taking advantage of good markets and laying up vessels when the market is bad. He currently has three ships in lay-up and is relying on his solid balance sheet to get his company through the downturn.

Continue Reading

The Editor is High

Whilst we know its summer in Surfers’ Paradise, Buenos Aires and Cape Town, the winter of 2003 has been particularly memorable at our headquarters near New York for the weather. Snow and cold and then even more snow in an unrelenting attack.

Equally unrelenting is our little corner of the world in ship finance. Since December 15, 2002, NYSE listed tanker companies have raised $1 .64b in new funds to finance what is largely consolidation in the industry and not for new tonnage. But others, like OMI, are refinancing and sandbagging the balance sheet to get stronger in a market that looks as if it cannot last, instead of getting bigger and more leveraged. Which strategy will win? Well, there are lot of theories out there and all are right in some respects but the best answer is that no one really knows. The world is just too uncertain. Activity has not just been in tankers. Sinotrans, the Chinese version of United Parcel Service and the old Sea-Land combined, hit the market with a $450m IPO with Credit Suisse and BOC International. It’s oversubscribed and up on the issue date. RCCL is out to replace their $1 bn revolver with a ‘best efforts’ of the same size with Citibank, Nordea and Dnb.

Indeed many bankers have indicated to this editor it’s the best in a while in terms of opportunities. Said one, “Last year you (the bank) had to grab onto whatever you could get and hope that you did not lose it, because if you did you would have a bad year. This year the bulls-eye is much easier to discern and the chance for many to have a good year, is not only excellent, its downright likely.”

Continue Reading

Marine Money Launches Tanker Index

Recently we got a callfrom a loyal reader of Freshly Minted (FM) noting that while the data regarding the “New York Liquid Bulk Peers Share Performance” chart that has appeared in most editions of FM of late and has evolved over the year to include more and more data, was interesting but “What does it really mean”. Well, that reader knows who they are and in fact most weeks we get a call from this person and we love and encourage further feedback.

The initial response to the question of what the data means was one akin to “Make of it what you will.” We have produced estimates on a range of tanker companies and were hoping to give a basic knowledge of some of the share performance of the companies noted. However this combination comment/question resonated. While each contingent part of the data has relative and varying degrees of importance with each company, and is therefore a valuable piece of information, why have all the data and not at least try to benchmark it? Continue Reading

Tsakos Priced

By Urs Dür and Matt McCleery

Before we oil-up the HP and get into the math, we’d just like to say up front that the role of Marine Money is a complicated one because shipowners, investors and financiers all rely on us, yet their interests are often mutually exclusive. Unlike a typical sell-side analyst report, we have to use three distinct perspectives when conducting our analysis. That means that in the perfect world, we would probably write four short articles on TEN and every other deal; what it means to the Tsakos family, what it means to JP Morgan and Jefferies and the other underwriters, what it means to the investors – and of course what the sum of these three things mean to the marketplace as whole. The following analysis is focused on what we think investors should look for when investing in tanker offerings, but we’ll start off by telling you what Marine Money thinks this transaction means for the issuer and underwriters. Unlike most articles in Marine Money, we won’t divulge our overall conclusion until the end. Continue Reading