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Source: Business Mirror
LONDON AND ATHENS—Loans to shipowners will drop by at least a third this year as frozen money markets curtail banks’ ability to raise funds and shipping prices tumble, according to the largest lender to the industry last year.
Banks will provide as much as $100 billion to shipowners this year, down from $150 billion in 2007, Ulf Andersson, head of shipping at Nordea Bank Finland Plc., told a Marine Money conference in Athens last week. Funding costs have increased to 1 percentage point above the London Interbank Offered Rate, or Libor, he said, without giving a figure for last year.
“We are in a vicious circle of financial turmoil affecting consumption and slowing down economies,” Guy Verberne, economic research chief at Fortis Bank, said in an interview in the city. “We have to sit it out and wait for the dust to settle.”
The shipping industry needs about $300 billion over the next three to four years to fund construction of vessels that are already on order, Andersson said. The cost of hiring ships to haul coal, ore and grains fell by record amounts last month. Container ships are also being idled because of slumping US demand for goods, Lloyd’s List reported.
Nordea was the largest lender to shipowners last year and Fortis was fourth, according to data from Dealogic Holdings Plc., supplied by Nordea.
Commodity carrier owners will be hardest hit by tightening credit markets, Andre Kabelitz, senior risk manager at Hamburg’s HypoVereinsbank, a unit of UniCredit Group, said in Athens.
“The dry-bulk market is going to be affected most because that’s where a lot of vessels have been ordered,” he said. Bank funding for shipping has doubled to 1.5 to 3 percentage points above Libor now, from 0.75 to 1.5 points last year, he said.
Libor, a measure of how much it costs banks to borrow from each other, soared to the highest level this year last week as coordinated interest-rate cuts by the world’s central banks failed to revive lending for longer than a day. It rose to 4.75 percent for three-month loans, the highest since December 28, when banks were hoarding cash on their balance sheets at year-end.
Rental rates for the ships, gauged by the London-based Baltic Exchange, will extend declines because of fleet growth, Henriette van Niekerk, senior dry-bulk freight analyst at Clarkson Plc., the world’s largest shipbroker, said in an interview. “More ships are being built and delivered and that will affect the spot,” or single voyage, rates, he said.
Some rentals are “already insufficient to cover costs” and financiers are “increasingly aggressive” in trying to squeeze margins from their customers, Paal Monsen, an Oslo-based partner at Maarsoft International AS, the world’s biggest independent risk consultancy to shipowners and banks, said in an e-mail. “The financial turmoil in the global markets has started to severely impact the shipping sector,” he said.
Oil-tanker derivatives indicating the cost of leasing supertankers next year have declined 24 percent to $51,116 a day this month, according to prices from Imarex ASA, the largest broker of the contracts.
Demand for oil has dropped 3 million barrels a day, Organization of Petroleum Exporting Countries president Chakib Khelil told Algerian state-run newspaper el Moudjahid on October 4. The group will take “appropriate measures to ensure stability” in markets, he said two days later.
“There will be less crude transported from the Middle East” next year because Brazilian, Canadian and African production will rise, Erik Helberg, head of shipping research at Norway’s Pareto Securities AS, said in an interview in Athens. Rental income will likely drop by half, he said. (Bloomberg)
LONDON AND ATHENS—Loans to shipowners will drop by at least a third this year as frozen money markets curtail banks’ ability to raise funds and shipping prices tumble, according to the largest lender to the industry last year.
Banks will provide as much as $100 billion to shipowners this year, down from $150 billion in 2007, Ulf Andersson, head of shipping at Nordea Bank Finland Plc., told a Marine Money conference in Athens last week. Funding costs have increased to 1 percentage point above the London Interbank Offered Rate, or Libor, he said, without giving a figure for last year.
“We are in a vicious circle of financial turmoil affecting consumption and slowing down economies,” Guy Verberne, economic research chief at Fortis Bank, said in an interview in the city. “We have to sit it out and wait for the dust to settle.”
The shipping industry needs about $300 billion over the next three to four years to fund construction of vessels that are already on order, Andersson said. The cost of hiring ships to haul coal, ore and grains fell by record amounts last month. Container ships are also being idled because of slumping US demand for goods, Lloyd’s List reported.
Nordea was the largest lender to shipowners last year and Fortis was fourth, according to data from Dealogic Holdings Plc., supplied by Nordea.
Commodity carrier owners will be hardest hit by tightening credit markets, Andre Kabelitz, senior risk manager at Hamburg’s HypoVereinsbank, a unit of UniCredit Group, said in Athens.
“The dry-bulk market is going to be affected most because that’s where a lot of vessels have been ordered,” he said. Bank funding for shipping has doubled to 1.5 to 3 percentage points above Libor now, from 0.75 to 1.5 points last year, he said.
Libor, a measure of how much it costs banks to borrow from each other, soared to the highest level this year last week as coordinated interest-rate cuts by the world’s central banks failed to revive lending for longer than a day. It rose to 4.75 percent for three-month loans, the highest since December 28, when banks were hoarding cash on their balance sheets at year-end.
Rental rates for the ships, gauged by the London-based Baltic Exchange, will extend declines because of fleet growth, Henriette van Niekerk, senior dry-bulk freight analyst at Clarkson Plc., the world’s largest shipbroker, said in an interview. “More ships are being built and delivered and that will affect the spot,” or single voyage, rates, he said.
Some rentals are “already insufficient to cover costs” and financiers are “increasingly aggressive” in trying to squeeze margins from their customers, Paal Monsen, an Oslo-based partner at Maarsoft International AS, the world’s biggest independent risk consultancy to shipowners and banks, said in an e-mail. “The financial turmoil in the global markets has started to severely impact the shipping sector,” he said.
Oil-tanker derivatives indicating the cost of leasing supertankers next year have declined 24 percent to $51,116 a day this month, according to prices from Imarex ASA, the largest broker of the contracts.
Demand for oil has dropped 3 million barrels a day, Organization of Petroleum Exporting Countries president Chakib Khelil told Algerian state-run newspaper el Moudjahid on October 4. The group will take “appropriate measures to ensure stability” in markets, he said two days later.
“There will be less crude transported from the Middle East” next year because Brazilian, Canadian and African production will rise, Erik Helberg, head of shipping research at Norway’s Pareto Securities AS, said in an interview in Athens. Rental income will likely drop by half, he said. (Bloomberg)
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