Capital Product Partners (CPLP) provided further impetus to its home country’s fledgling bond market, raising €150m ($175m) on the Athens Stock Exchange.
The five-year, unsecured paper pays a coupon of 2.65% and will help finance the containership company’s $623m expansion into LNG carriers through the acquisition of three newbuildings that will double its fleet of such vessels to six.
"The bond was issued at the low end of the yield range, based on exceptionally high demand," CPLP chief executive Jerry Kalogiratos said.
Greek institutional and retail investors lapped up the issue, as they did last May when Costamare, another US-listed and Greek-controlled company, broke open the market with a €100m issue of unsecured five-year bonds paying 2.7%.
Costamare's move came just before the containership company embarked on a buying spree, spending more than $500m to diversify into bulkers, of which it bought 37.
Shipping executives speaking at Marine Money's Greek Ship Finance forum on Wednesday, a few hours before CPLP announced its pricing, said they expect more companies to tap the nascent market.
"I am hearing that there are at least another two or three peers in the pipeline to follow," said Simos Spyrou, co-chief financial officer at Star Bulk.
Welcome opportunity
Clarifying that his own company is not among them because it is in deleveraging mode, Spyrou said Athens bonds are cheap for companies seeking to take on debt compared with other markets where such financial products are sold.
A $50m unsecured baby bond that Star Bulk repaid this year in the US carried an 8.3% coupon.
Even adding the cost of currency swaps, Athens bonds come at almost half the cost of US bond issues and are also cheaper than Norwegian issues.
This is a welcome opportunity for Greece-based companies shopping around for new pockets of finance.
Costamare and CPLP said their main motivation was to diversify their sources of financing.
Credibility and visibility
"In a world in which high-yield isn’t high-yield any more", shipping bonds can expect to meet investor interest across the world, not just in Greece, DNB Markets managing director James Cirenza told the Marine Money panel.
However, conditions in Greece seem particularly attractive. The issues, which target institutional and retail investors, were oversubscribed many times over — in the case of Costamare by nearly seven times.
That is partly because shipping companies, regarded as a somewhat speculative investment elsewhere, enjoy a high reputation in Greece, which is home to some of the world's biggest and most successful ones.
A US listing provides further credibility and visibility in the eye of local investors. Companies trading publicly elsewhere also have much of the paperwork already in place to set an Athens bond listing in motion — a big bureaucratic exercise that takes several months to complete.
Despite being around for more than 140 years, the Athens Stock Exchange has never established itself as a vehicle for raising meaningful amounts of money for Greek shipowners.
Investment-hungry
An attempt in the early 2000s to establish Oceangoing Shipping Investment Companies, known by their Greek acronym as EEPNs, failed.
Efforts were then increased as Greece struggled to attract investment and turn itself into a business hub in the wake of its crippling sovereign bond crisis and Europe-financed bailout.
Senior Greek policymakers first mooted shipping bond plans four years ago, as TradeWinds reported.
The plans eventually materialised after a concerted effort by private Athens brokers and investment bankers, who took the initiative to contact a number of local shipping companies.
The Costamare and CPLP bonds were arranged and led by Euroxx Securities, a local brokerage, in cooperation with Piraeus Bank and Alpha Bank, two heavyweight Greek lenders with strong ties to the shipping community.
That is one of the reasons Athens shipping bonds are expected to stay a local affair, involving Greek companies.
Some players are unconvinced about the market's prospects.
"We won’t go to Greek capital markets, we believe there’s not enough depth," said Iraklis Prokopakis, chief operating officer of Athens-based, US-listed Danaos Corp.
"These are also euro-denominated issues and we like dollars, mainly."
This story has been amended since publication to remove a photo that incorrectly identified Simos Spyrou of Star Bulk.
