The best way for a shipowner to secure a supersized bank loan of $1bn or more is to start with ambitions for a much smaller facility, say executives at two companies who have secured such business.
Scorpio Tankers and GasLog both signed huge facilities with multiple banks in 2023 in what was seen as a comeback year for the $300bn conventional ship lending market.
Hugh Baker, managing director of Scorpio USA, told a Marine Money conference in London that the $1bn loan finalised last summer had “really started out as a small deal”.
Yet as the process of talking and setting boundaries with banks evolved, “the numbers kept getting bigger and we became more comfortable that more banks would join”.
Baker continued: “We really started out with a $20m transaction. We talked to them about a $250m to $400m transaction and then after the feedback we started talking about a $650m to $700m transaction and eventually we capped it at $1bn.”
In November, Peter Livanos-backed GasLog secured a $2.8bn loan that set a record as shipping’s largest bank debt deal since the financial crisis of 2008
Achilleas Tasioulas, chief financial officer of GasLog, explained that the deal with 14 relationship banks was put together in only three months.
“The key here is to run fast,” he said, noting that he now sees banks as present and ready to support the shipping business.
Baker told the conference at London’s Park Lane that the abundance of capital out there is “absolute”.
He said “enormous” amounts of capital are also available in the leasing sector.
Despite the healthier conditions in the core ship finance market, Baker said there are still mixed messages from banks at a time when they are concerned with multiple regulations and sustainability pressures.
“There are a lot of clouds on the horizon. But there is so much capital available and all of the main sources of capital are doing rather well,” he said.
“Banks are lending to us because they are very profitable at the moment. They have a very good experience with their shipping books.
“The one thing the bankers are telling me is they don’t have any losses on their books. There are no provisions and they have not had any credit issues.
“We have a very healthy bank market at the moment and a lot of the other markets are very healthy too. There is a lot of money available.”
