New York-listed tonnage provider Global Ship Lease (GSL) has confirmed a new feeder ship charter at more than 300% of the previous rate.
The 2,200-teu Kumasi (built 2002) had been fixed to French line CMA CGM since 2016 at $9,800 per day.
There was an option for this to rise to $32,000 per day through to the end of 2024 after a drydocking at the end of 2021, but the deal looks to have been dropped.
GSL said a new contract for the scrubber-fitted unit is now in place for three years with a leading operator at a “highly attractive” $38,000 per day.
This level is 20% above deals secured for sister ships in the fourth quarter of 2021, demonstrating charter markets that continue to strengthen at record rates.
TradeWinds reported at the end of December that Wan Hai Lines of Taiwan was the charterer for 3.25 years at a total cost of $43.5m.
Debt costs cut
GSL also said it has agreed a $219.4m refinancing of its largest remaining bank debt, pushing out maturity from September 2024 to December 2026.
The finance has been fixed at an unchanged rate of Libor plus 3%.
The deal will boost the owner’s capacity to sustain dividends through market cycles, it said, as well as releasing three vessels from collateral.
This trio has now been pledged as security for an additional $60m loan priced at Libor plus 2.75% that will redeem a $26m junior debt facility with a coupon of 10%. The rest will be used for general corporate purposes.
GSL has also put in place a hedge on its exposure to a “potential rising interest rate environment”.
This involves a cap at Libor plus 0.75% through to the fourth quarter of 2026 on $484m of its floating rate debt — about half the total amount of this type of borrowing.
Executive chairman George Youroukos said: “As the numerous multi-year forward charters that we have agreed in recent quarters increasingly come into effect and substantially strengthen our long-term cash flows, we have remained active in ensuring that we crystallise the long-term benefits of having a high-quality fleet during this extraordinarily strong market.”
He explained that GSL has had continual success in improving the balance sheet by reducing the cost of debt and using hedges.
Its lending group now totals 18 banks.
More lucrative charters to come
The chairman also said GSL is exploring opportunities for forward contracts for vessels coming off charter later this year.
He added that the Kumasi deal is clear evidence that the market for mid-sized and smaller containerships has “maintained significant positive momentum on the back of highly supportive and durable fundamentals despite what is traditionally the low season for the charter market”.
The fleet of 65 vessels now has a charter backlog of $2.15bn if options are included.
Fearnley Securities said GSL has three ships rolling off term deals this year, including two 9,115-teu post-panamax units.
“With stretched supply and high demand for larger units, we expect charter updates for these vessels to be imminent,” the investment bank added.
Consultancy Alphaliner assesses the benchmark for 8500-teu ships at $65,000 per day for five-year contracts, implying “massive” backlog potential for GSL, Fearnleys said.
