London: The value of the 34 vessels purchased by Star Bulk from Excel Maritime has lost almost 50% of its value since the deal was agreed, new data has confirmed.
The Excel fleet is currently worth $351.1m, compared to $623.2m when the sale was agreed on August 18, 2014, according to valuations from VesselsValue.com (VV).
“Bulker market values have been suffering severely over the last five months, during that time the Baltic Dry Index (BDI) has fallen dramatically,” Toby Yeabsley, VV’s valuation analyst, told Splash.
“Even though only a small part of our VV values are based on market sentiment, with rates so low and in some cases close to the OPEX [operating expenditure] it has caused the value of bulkers to the drop off dramatically, and in some sectors we have seen values hitting historic lows,” Yeabsley said.
“Recently, Scorpio Bulkers sold a 2015 panamax bulker for $27m at the end of March this year after paying $31.5m for the same vessel two years ago.”
Dry market rates have shown little sign of improvement over the course of this week. Today the BDI climbed 1 point on yesterday to reach 600 points; last Friday it was at 597 points.
One-year timecharter rates for capesize vessels have stayed static on last week’s level of around $10,000 per day, according to estimates from shipbroker Alibra Shipping.
What does this mean for Star Bulk’s balance sheet? Analysts say they aren’t too worried.
“In my view, the company has enough excess cash on the balance sheet to endure a prolonged weak market. But its large on-the-water fleet does translate to operating cash flow headwinds in the current depressed rate environment, which the company appears to be working to address,” Amit Mehrotra, Deutsche Bank’s lead shipping analyst , told Splash.
Deutsche Bank values the current 98-ship Star Bulk fleet at $2.2bn, including 28 newbuildings, which is the same as VV’s valuation.