Private Japanese shipowners have been growing their business in the gas market through secondhand and newbuilding sale-and-leaseback deals.
Japanese bareboat charter lease deals have emerged as an attractive refinancing option for gas carrier operators.
At the same time, it has given Japanese owners a chance to expand in one of shipping’s fastest-growing high-value markets.
In the most recent deal, Imabari-based Shunzan Kaiun financed the 84,000-cbm dual-fuel VLGC Captain Markos (built 2023) from Dorian LPG following its delivery from Kawasaki Heavy Industries on a 13-year bareboat charter-back arrangement.
Dorian LPG had earlier struck similar deals for two 2015-built 84,100-cbm VLGCs, the Copernicus and Cratis, with Hiroshima-based Yamamaru Kisen.
Shunzan also broke into the LNG carrier market by acquiring a stake in the 180,000-cbm Gail Bhuwan (built 2021).
The leaseback deals are attractive because there is a lot of Japanese liquidity in the market chasing investment opportunities.
The bareboat charter-back deals are essentially a refinancing, which also allows operators to keep the asset on their balance sheet, and includes purchase options to fully acquire the vessel if asset prices move in their favour.
Imabari’s Doun Kisen has been one of the most active in recent years after striking deals with Capital Product Partners and Eastern Pacific Shipping.
It broke into the LNG market last summer in a bareboat charter-back sale-and-purchase deal with Capital Product Partners for the 174,000-cbm Adamastos (built 2021).
The move came after agreeing bareboat charter deals for the 98,000-cbm very large ethane carrier (VLEC) newbuildings STL Nanhu and STL Qianjiang (both built 2022) with Eastern Pacific.
One more bareboat deal was struck by Doun Kisen for the 98,000-cbm VLEC STL Huanghe (built 2022) with Biko Shipping.
Doun Kisen also bought and bareboat chartered back the 38,550-cbm LPG carrier Myklebust (built 2022) from Eastern Pacific.
Many Japanese owners have been left with cash burning a hole in their pockets after operators took up purchase options on bulk carriers on long-term charter during a boom in asset values last year.
Usually, the funds would be recycled into the newbuilding market. But, faced with elevated yard prices and low time charter rates, instead Japanese operators have looked to redirect the funds towards bareboat charter-back deals on newbuilding deliveries or secondhand ships.
The deals have largely focused on foreign operators, which are attracted by the financing terms and for vessels built outside of Japan.
Imabari-based Mizuho Sangyo has acquired one LNG carrier through a bareboat charter with a Japanese operator and is committed to another deal later this year.
