Cash is king but you will have to wait for the S&P deals

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It appears it is all doom and gloom at the Singapore Maritime Week with brokers claiming there is no sale and purchase market currently operating and bankers warning of a complete drying up of finance for new or second hand ships.

One broker questioned by SMI, said that those cash rich owners capable of taking up available tonnage, were waiting in the wings in anticipation of vessel values dropping even further. Some were even pegging their future vessel purchasing strategies on financially-stretched owners going bankrupt which would leave their vessels floundering in need of a home.

He said those owners most affected by possible financial difficulties “were those who are most exposed with the big newbuilding programmes. Smaller owners with older, fully paid-up ships on the spot market were fine but once these ships are gone, they are gone.

“Another important aspect is what bank you have. If you are working with a traditional shipping bank who knows how the markets work and has the necessary patience, then that is better,” he said.

Worries over the lack of finance were echoed by a leading Scandinavian ship finance banker who told SMI that currently 40% of newbuildings under order were unfinanced and further problems were in store for those ships currently trading but which were due for secondary financing.

Perversely, the credit crisis could be good news for those third party ship managers keen to carry out a bit of their own ‘ambulance-chasing’. Indeed, one major Singaporean manager admitted to SMI that he was actively pursuing banks to handle the management of vessels from those owners unable to keep up the payments.