For shipping, this year has shown a very robust performance so far.
In this respect, the Covid-19 pandemic for once has been positive in the sense of a "proof-of-concept". We have not had any default or loss in our book. We have just made the third stress test which, during the Covid-19 pandemic, we have introduced every quarter on our portfolio.
After a year like no other, TradeWinds asked 40 shipping industry stakeholders what they see for 2021 after a year beset by the coronavirus, and how the pandemic will shape shipping's future.
Even with the downside case scenario around Covid-19, we don’t foresee any major problems.
That outcome is very important because we work with institutional capital in credit funds. For those investors, not losing money in tough times is the best message you can have.
We will probably have the same amount of new business as last year — and last year was a very good year for Berenberg with regards to new clients onboarding and new lendings.
And we have our credit funds in place. The first credit fund has reached €500m ($604m) — of which around 90% is invested. And we set up and just started to invest the second fund.
So even during Covid-19, we managed to raise new funds for maritime debt.
Opportunities
Next year is when the buzz word of digitalisation really kicks in and elements of the digital process come into the ship-financing process.
Especially, if you talk about smaller financing tickets. There are many owners looking for financing, say for a 10 to 15-year old vessel, where the volume of which is below $5m. For that, we need more digitalised processes.
Some start-up offerings have already shown promising solutions. But in the end, banks should learn from those as diversified loan portfolios with a variety of ticket sizes proved to be healthy in the past.
That is one area where we are working on solutions for our offering.
A second area is on the investment side.
If our thesis is right that there is "equity recycling" to come, then more fresh equity needs to come to the table for secondhand tonnage.
We will think about whether there are any other products where you can find investors to go into the good secondhand project and to co-invest with good owners.
We will talk about secondhand tonnage being more attractive for a while — up until the right solution for fuel propulsion and fuel is settled, which may be after 2023, but definitely within this decade.
