Why lenders are throwing money at shipping

This episode is brought to you by Wirana Shipping Until the opening decade of this century, shipowners were among the chief beneficiaries of what was known at the time as ‘relationship banking’. The market was dominated by a handful of British and German banks, who usually just allowed their ship finance teams to get on with it and didn’t ask too many questions. It seemed that there were few problems that couldn’t be sorted out over a three-bottle lunch at a rather expensive restaurant. If the top brass were ever sufficiently impertinent as to ask why leniency had yet again been extended, they were told they simply didn’t understand the cyclical nature of the shipping industry. Then a bunch of derivatives traders came along and spoiled the party. In the wake of the global financial crisis of 2008 onwards, shipping loans could be bought for just cents on the dollar and bad shipping loans even forced a number of long-established banks to close their doors altogether. Private equity rushed in and, by and large, lost its shirt. To repurpose the earlier euphemism, it simply didn’t understand the cyclical nature of the shipping industry and was never going to wait around long enough to get its money back. While European banks still lend to blue chip shipowners, many smaller and medium-sized owners have turned to Asian, and especially Chinese, leasing companies to source their S&P needs. For a while that worked, especially because the Asian lenders were politically mandated to keep domestic shipyard orderbooks as full as possible. But even that arrangement has been under strain in the last 12 months, thanks to tariff and port fee tensions between Washington and Beijing. So what happens now? If you need to borrow money next year, who is going to lend it to you and how much will you be expected to pay? Joining David on the podcast this week are: Stephen Fewster, global head of shipping finance, ING Bank Pankaj Khanna, chief executive, Heidmar Maritime Holdings Dimitris Karamacheras, partner, Hill Dickinson