Liquidity will remain a key question for offshore support vessel owners in the coming months despite massive refinancing efforts this year.
DNB Bank's global head of ocean industries, Jan Ole Huseby, believes it remains to be seen whether restructuring deals work in the long term for companies in the beleaguered sector.
"Offshore is causing the main concern," he told TradeWinds.
He said the bleak market situation has not changed much over the second quarter.
"Going into the [coronavirus] situation, it was a liquidity issue. Obviously for the past three months it has been a huge liquidity issue, and I think it's going to be a liquidity issue going forward as well," he said.
"I don't see any immediate strengthening of those markets unfortunately."
TradeWinds has reported that offshore owners in Europe and the US have been trying to refinance more than $8bn of debt in recent months, after the market was clobbered by the oil price fall and virus disruption.
Solstad Offshore, Havila Shipping, Siem Offshore and DOF Group are among those either clinching long-term deals, or buying time for such lasting solutions.
Banks have taken over Solstad in a debt for equity swap.
Long term uncertainty
Asked if these deals would provide sufficient runway to preserve the businesses, Huseby said: "In most circumstance that is what we must hope, but also many of these restructurings are compromises between a lot of stakeholders, which is also reflecting the pressure."
He added: "That would be my hope, that for most of them that would be something that would take them a bit into the future."
But whether the deals are sufficient for all of the offshore vessel owners remains to be seen.
The banker said: "It's a dynamic picture and it would be wrong for me to be very bombastic in one direction or another.
"It's still about having a close dialogue with the client, looking at the cases and taking it from there."
Huseby said it is difficult to forecast future impairments.
"In a perfect world, impairments would be expected impairments, but again the dynamic of the situations and the possible outcomes are still creating some uncertainty," he added.
Impairments down from first quarter
DNB's net impairment losses amounted to NOK 1.86bn for the oil, gas and offshore segment in the second quarter.
This is an increase of NOK 1.9bn from the second quarter of 2019, but a fall of NOK 742m from the first three months of this year.
Its 2020 losses mainly related to offshore clients in stage three.
Offshore lending has been shrinking in recent years and now stands at less than 2% of its overall book.
"The macro forecasts for this segment in the second quarter are stable compared with the previous quarter, as the oil price is developing in line with expectations, and the challenging situation for offshore companies continues," DNB said in its results statement.
