The shipping industry has experienced a very turbulent and somewhat negative decade since the 2008 financial crisis. The banking industry is a lot more regulated post-recession era and risk management is paramount. Many of the traditional shipping banks have either sought to leave the shipping industry altogether or have drastically reduced their exposure in response to a significant number of defaults and non-performing loan portfolios. As a result, traditional financing is at most only available to the minority of “blue chip” shipowning companies, and this has led to a significant number of shipowners pursuing alternative methods of financing for the acquisition of vessels, including sale and leaseback transactions.
With vessel prices rising in light of regulatory demands, particularly in the area of environmental protection, shipowners are increasingly considering these types of transactions as a means of freeing up capital whilst maintaining the ability to operate a vessel and trade as owners under a long-term lease, typically a bareboat charter. In particular, lease financing provided by Chinese companies, primarily for new vessels built in China, has, in recent years become a hugely important feature of global financing for shipping.