Seaspan's $225m in preferred and common share dividends face a potential cut this year as its containerships seek new employment in a weaker rate environment, Morgan Stanley said in a research note.

Fotis Giannakoulis, the bank's maritime analyst, initiated coverage on the Vancouver-based shipowner with an 'underweight' rating and a $4.50 price target. He says boxship charter rates may not show any improvement until 2019.

"Containership demand fundamentals remain highly challenged with liner operators recording heavy losses, resulting in sharp increases in idle capacity and record low charter rates," the report said.

Seapsan shares dropped $1.38 per share to $8.22, a 14% decrease for the day.

'Deteriorating balance sheet'

Giannakoulis says container trades will lag overall economic growth for the next two years, keeping charter rates low through 2018. Hanjin's bankruptcy added to the oversupply of containerships in the market, which will pressure the rates on vessels as they roll off existing charters.

Seaspan, which operates 92 vessels, pays out some $160m in common dividends and $65m in preferred share dividends. But the company also has to service its debt amortisations and lease obligations. He says the company faces some $600m in balloon payments on its debt by 2019.

Seaspan faces a "deteriorating balance sheet and liquidity position as its current dividend creates annual cash burn that exceeds $200m."

Costamare better positioned

Giannakoulis took the opposite tack with boxship peer Costamare. He lowered his price target on the New York-listed owner, but still gave it an 'overweight' rating.

Costamare shares were up $0.19 to $5.50.

He says the company appears better prepared to handle the current downturn. The duration of the company's charters "allows it to remain profitable even under current trough charter rates," Giannakoulis said.

Costamare already took the major steps needed to make it through the downturn, including a $70m equity raise and a 65% cut in its dividend. A dividend reinvestment plan instituted at the company suggests that the Konstantakopoulos family, which owns a majority stake in the shipowner, appears "committed to support Costamare's liquidity."

The better balance sheet will give Costamare "an opportunity to take advantage of current weakness to buy cheap vessels, providing favorable optionality for a 2019 to 2020 recovery," Giannakoulis said.