Sale-and-purchase market observers had been waiting since December for a capesize deal to provide some indication of how falling earnings have affected secondhand values for the large bulkers.
US-listed Safe Bulkers did them the favour late on Tuesday, announcing a capesize acquisition that clearly shows values are on the way down.
The Polys Hajioannou-led company said in a statement that it agreed to spend $33.8m on a 181,000-dwt ship built in Japan in 2014.
The company did not directly identify the vessel but provided some clues by saying that it is a sistership of the 181,400-dwt Stelios Y (ex-Yumetamou, built 2012) — a ship built at Koyo Dockyard, which Safe Bulkers agreed to acquire in August in a complex bareboat structure.
That description, and market sources following the deal, suggest that the vessel that changed hands is the 181,400-dwt South Trader (built 2014), which is currently listed with Sinokor Merchant Marine and Banc of America Leasing.
Back in October, when the Baltic Capesize Index (BCI) was briefly hitting 13-year highs, VesselsValue estimated that the South Trader was worth a whopping $42m on the secondhand market.
The freight market, however, has moved into reverse since then, with the BCI shedding a staggering 93% since 7 October to 745 points on Tuesday. That is its lowest reading since June 2020.
Market players like Safe Bulkers, however, seem to be shrugging off that drop as temporary and think that the time is ripe to start purchasing capesizes again.
Safe Bulkers president Loukas Barmparis said in the statement that his company bought the ship “at what we believe to be a competitive price, capitalising on the capesize market’s seasonal weakness”.
More deals coming
Other players seem to be of the same mind. Late on Tuesday, Athens-based brokers reported that an unidentified Greek company is in the process of purchasing another big bulker, the Japanese-controlled, 206,300-dwt Baosteel Elevation (built 2007), for about $18m.
That is far below the $21.4m that Signal Ocean’s valuation platform suggests the Imabari-built ship is currently worth.
Smaller bulkers, which have not seen their earnings drop as steeply as capesizes, suffered no material value declines in the secondhand market, as TradeWinds reported on Monday.
Safe Bulkers will take delivery of the South Trader in February, at which point it will rename it as Maria.
The company said in its statement that it funded the acquisition of its new capesize, which will be the sixth such ship in its fleet of 40 bulkers, from its own cash reserves.
The company, however, is on the lookout for some outside funding to bankroll further growth. As TradeWinds reported on 24 January, Safe Bulkers plans to raise €100m ($113m) by selling bonds in Athens.
The company is currently awaiting formal approval by Athens Exchange authorities to go ahead with the move, which would make it the third shipping firm to sell such bonds on the Greek financial market.
Irene Ang contributed to this story. The article was amended after original publication to identify the vessel purchased by Safe Bulkers and to add a further S&P deal
