Chinese banks increase exposure to Hellenic shipping market


It’s been four years now since China and Hellas established a $5 billion credit line towards financing of Greek ship owners looking to invest in Chinese newbuildings. Since then, a lot of deals have been made and owners have taken advantage of the attractive financing. But this was applied to established “household” names of Hellenic shipping industry, i.e. prominent owners with decades of family history in the business. Smaller and medium-sized owners which form the backbone of the country’s maritime industry have been, largely, excluded from financing.

This is starting to change, especially after last month’s visit to Hellas by Chinese Prime Minister Mr. Li Keqiang. Chinese banks are more specifically Chinese Development Bank signed an MOU with the Greek Ministry of Shipping, towards extending credit towards small and medium ship owners from Hellas, while also it pledged to examine the possibility of establishing a permanent physical presence in Piraeus. These were major steps towards enhancing the two countries maritime relationships.

According to the latest weekly report from shipbroker Intermodal, “China Exim Bank raised its Greek shipping portfolio to $1.3bn and is pacing itself for increasing its exposure in the world’s largest shipping market. It finally seems that Chinese lenders cannot ignore the fact that Greek-owned ships carry 60 per cent of oil, iron ore, coal and other commodities imported by China. ICBC and CDB managed to also raise eyebrows during the same week; especially the latter and its mammoth loan agreement with Costamare for $1.5bn against the owner’s new building program at Chinese shipyards. After all, Greek owners are the biggest customers of Chinese shipyards with almost 200 vessels on order, which means that alignment of interests between the two economies is needed now more than ever”.

According to Intermodal’s Mr. George Dermatis, SnP broker, “although these steps are sporadic and do not necessarily solve the problem of the finance gap that the shipping market faces these days, they are definitely steps in the right direction for –potentially- one of the world’s largest shipping lenders in the years to come. The know-how and track record being built up is immensely significant for establishing confidence in the “name lending” particularities of shipping finance. Undeniably, Chinese lenders are undergoing a phase of intense restructuring during the past 12 months and the ripple effects are obvious in the shipping industry –including but not limited to the- difficulty that shipyards have in obtaining both refund guarantees and construction loans for several projects. Whilst still trying to create a sustainable framework through small steps rather than a large-scale stimulus, the Chinese Central Bank’s monetary easing over the past 2 months has been positively received by equity markets”, Dermatis said.

He added that “one move towards this direction was announced last week as policy makers committed to increase the number of lenders eligible for lower reserve requirement ratios (RRR). As the Chinese economy is entering a “quasi-deflation” mode, the Central bank is focusing on reducing finance cost in the long run by allowing more and more institutions to use RRR and interest rate adjustments in the short run. These moves, although primarily designed to help the ailing housing market and farming sector, speak volumes about the government’s intention to actively address the concerns of a “hard landing”.

Concluding, Mr. Dermatis noted that “with the freight market still at year lows, it is almost unavoidable to look towards China for glimpses of hope. Whether growth rates will be sustained at levels which will allow healthy trade volumes and subsequently raise freight rates, seems a bit premature to judge. One thing is certain though; all policies from the present Chinese government –even the deflationary ones- have so far been towards the right direction. Although the net result might not be enough to break open the bubbly just yet, we cannot ignore the fact that it is the first week in a long time that we saw some big names in dry cargo chartering slowly coming out of their shell for period charters”.

Source from : hellenicshippingnews