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Dry bulk recovery at risk from new flood of investor money: Pareto

Dry bulk recovery at risk from new flood of investor money: Pareto

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As part of BRS Group’s just released 120-page annual review Pareto Securities has warned dry bulk risks seeing a flood of new money coming into the sector, staving off a potential recovery.

“It is likely though we will see a progressive return of investors looking at countercyclical opportunities in the several distressed segments of the industry. On the equity side as well as the high yield debt side, dry bulk will most certainly be the first segment to run the risk of getting flooded by investor money again, endangering a recovery,” Pareto Securities noted.

The assumption follows hot on the heels of news carried on this site last Friday that owners were now making plenty of enquiries at Chinese shipyards with a view to ordering bulkers.

Pareto also suggested debt private placements will further gain importance this year, although will be limited by the small portion of adequate projects meeting the criteria of investment grade investors.

Meanwhile, Chinese leasing houses were described by Pareto as being “the most aggressive players going forward”. Pareto felt that the Chinese firms could with rising competition progressively need to look at deals with shorter employment guarantees and more terminal value exposure to the asset.

Concluding by looking at the “sober” geopolitical, financial and shipping picture Pareto referred to a quote from famed 19th century financier Nathan Rothschild who in 1810 had no better advice to investors than to “buy on the sound of cannons” and “sell on the sound of trumpets”.

The full BRS annual review, which goes through most shipping sectors, can be accessed by clicking here.

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Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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