Monday, March 5, 2012

Stormy Seas Ahead for Shipping Trusts

Shipping Trusts are likely to see more defaults as the slowdown in global trade is expected to hurt charting rates which in turn will result in a fall in revenue for ship-owners thus putting the many vessel mortgages at risk.  Shipping trusts like FSL trust and Rickers see tough times ahead especially for 2012.  

Mr Philip Clausius, president and CEO of FSL Trust management says, " The industry is still plagued by a significant oversupply of ships and this coincides with very substantial financial stress, in particular among European banks who have historically been very large lenders in the industry."

While certain shipping trust like Rickmers had even outperformed real estate investment trusts (REITs) by more than 5 to 7 per cent, these high yields might come with high risk.  The risk here probably being related to the health of the shipping industry.

Just recently, NOL also sunk into the red, and that perhaps gives one the idea of the stormy seas that lie ahead for the shipping industry.

1 comment:

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