Seaspan's highly-leveraged newbuilding programme is sustainable due to a huge charter backlog connected to the ships, analysts believe.

The subsidiary of US-listed Atlas Corp clinched the final $1.4bn tranche of a $6.9bn finance bill for its 70-ship newbuilding drive on Wednesday.

The total cost of the vessels is $7.6bn.

Fearnley Securities said this leveraging of 91% may seem "aggressive at first sight".

But with backing from a charter backlog of more than $11bn, and an average contract duration of 11.5 years, analysts Peder Nicolai Jarlsby, Erik Gabriel Hovi and Ulrik Mannhart said the newbuilding programme has a sustainable overall gearing.

"With all newbuildings fully financed, Seaspan is now set to harvest from its transformational growth with three newbuildings already delivered and seven more vessels scheduled to hit water later this year," they added.

The remaining vessels will be delivered throughout 2023 and 2024. They will generate annual revenue of $1bn.

Tightening the credit curve

"With this, we argue Seaspan takes another step to further tighten its credit curve with improved credit quality from diversified funding sources, improved liquidity visibility and deleveraging from contracted cash flows coming closer by the day," the analysts said.

Seaspan parent Atlas Corp's share price closed down 1.46% at $14.16 in New York on Wednesday.

Fearnleys has a buy recommendation on the stock, with a target price of $21.

Vessel lessor Seaspan said the latest finance transaction is the second "innovative" deal involving Japanese sale and leasebacks, following an $838m financing in December.

The $1.4bn deal will fund 10 LNG dual-fuelled boxships of 15,000 teu each under construction at an unnamed shipyard.

The transaction in December was the first of its kind involving Japanese sale and leaseback equity backed by export buyer credit insurance from an export credit agency (ECA), in this case in China.

The second deal was developed with lender Citi and South Korean ECAs K-Sure and Export–Import Bank of Korea.