Yangzijiang

S&P notes that operators finding it harder to raise capital for new ships, refinance existing loans; shipping defaults will increase in the next few quarters after charter rates for the merchant fleet plunged and banks imposed tougher lending conditions. Rates for vessels have slumped to between 30% and 80% below their 10-year average, as rising fuel costs are curbing earnings and ships ordered during the industry’s boom years are joining the fleet at a time when global trade is subdued; market conditions are lowering the value of assets and discouraging lending. S&P expect asset values and the performance and credit quality of shipping companies to remain weak. Since the credit crisis, orders to build new ships have plunged. Contracts for new vessels halved to $84.7b in 2012, compared with $174.7b in 2008.