‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.
Sometimes seemingly tangential, sometimes humorous, occasionally sarcastic, but always insightful and topical.
And, this week’s ‘Shipshape 10’:
With the freight markets fairly decent and with the continuous buoyancy of the equity markets, we think the recent news of shipping companies accessing the capital markets has been the most noteworthy and encouraging of all; still, the amounts are small for most practical purposes, but it’s encouraging to see that capital markets are not completely shut for shipping; this week, Seanergy (ticker: SHIP) successfully raised $15 mil which follows on the $14 million Safe Bulkers (ticker: SB) and $72 mil Costamare (ticker: CMRE), $106 million Höegh LNG (ticker: HMLP) and the $100 million the Saverys’ backed Hunter Maritime Acquisition Corp (ticker: HUNTU) in the form of a SPAC (blank check) raised.
1. Seanergy Maritime Holdings Corp. Prices $15 Million Offering (company press release)
Small disclaimer that Karatzas Marine Advisors & Co. has contributed the Industry Section Report for the F-1 filing with the Securities and Exchange Commission (SEC); the F-1 filing can be found here, Form F-1.
Still on the financial front, HSH Nordbank AG has reported taking more than $1 billion provisions for their non-core shipping loan portfolio; sobering developments…
2. HSH preparing for change of ownership ─ net profit € 163 million after nine months (company press release)
No doubt that shipping finance is a tough market; Oaktree has been making yet another approach to shipping, this time by providing credit (lending) to shipowners. It’s another effort to capitalize on the opportunity created by the shipping banks leaving the industry. The news on Splash 24/7:
3. Oaktree develops financing model for smaller owners seeking secondhand bargains (from Splash24/7)
Without trying to toot our own horn, Karatzas Marine Advisors & Co. had written about the business opportunity in the Cayman Financial Review in October 2015, more than one year ago;
Credit funds in the wake of departing shipping banks
On more commercial issues, Iran (Islamic Republic of Iran Shipping Lines and Iranian Offshore Oil Co.) finally entered into the newbuilding market with a decent order of four new-panamax containerships of 14,000-teu and six product tankers; the news of newbuilding orders is disheartening in this market, but again, Iran does have to rebuild their fleet, having remained away from the markets since 2006; interesting to note that the order for the newbuildings is going to Korean and not to Chinese as speculation held that ships-for-oil trade with the Chinese may had offered more value:
4. Iran Shipping Lines Close to $650 Million Korean Order (from the Wall Street Journal)
The markets are completely moribund, and this week’s auction by Mexico for drilling in the Gulf of Mexico drew strong demand, from the usual suspects (ExxonMobil, Chevron and Total), but also by the national Chinese oil company (China National Offshore Oil Corporation (CNOOC):
5. Oil and Gas Industry Leaders Eagerly Take Stakes in Mexican Offshore Fields (from The New York Times)
While often much more attention is paid to shipping and ships, one has to keep in mind that often complimentary businesses may be as enticing as shipping; Dubai-based global ports operator DP World joined forces with Caisse de dépôt et placement du Québec (CDPQ), one of Canada’s biggest pension funds, to create a $3.7 billion vehicle to invest in ports and terminals; individual ships or shipping companies can come and go, sink or sail, but they always need ports to load an discharge, a seemingly lower risk investment in an otherwise volatile industry:
6. DP World Joins Canadian Pension Fund to Create $3.7 Billion Investment Vehicle (from the Wall Street Journal)
While Ontario’s pension fund (Ontario Municipal Employees Retirement System, OMERS) has divested a majority stake in V.Ships, the vessels’ management company; the economics of the transaction were not made public, but likely at a nice return for OMERS since 2011 when they bought the company for $520 million:
7. V.Group Changes Hands (from the Maritime Executive)
while there has been stipulation for the UK to seek a more hands-on approach with the national flag:
8. UK eyes part-privatisation of Ship Register to compete for flags (from the Financial Times)
The timing of the transactions above is interesting however; could this be a headwinds environment for vessel management companies too if growth is to slow down?
9. Get used to it: Economists see “new normal” of slow growth (from the Associated Press)
while the strength of the US dollar causing undue pressures on trade movements
10. Why a strengthening dollar is bad for the world economy (from The Economist)
All too familiar picture: pretty ship sitting high in the water. Credit image: Karatzas Images
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