Lending capacity for shipping in Germany could rebound in the coming years despite significant portfolio reductions by local banks, German restructuring consultant and investment manager Notos said on 4 June.
Significant debt capital volumes could be mobilised for shipping through domestic institutional investors such as pension funds and insurance companies as an alternative to classic ship-mortgage lending by banks, Notos’ managing partner Jens Rohweder told IHS Maritime.
“It is potentially a multibillion-dollar market. In any case, you need at least USD500 million to USD1 billion for a shipping debt fund in order to build up a diverse portfolio,” he explained.
Notos is among the new breed of registered alternative investment fund managers in Germany that have set out to raise fresh funds from institutional investors for shipping, in a shift away from the country’s once glorious KG financing scheme, which broke down after the 2008 financial crash and mass insolvencies of one-ship KG companies.
Insurance companies and pension funds tended to give shipping a wide berth in the past two decades. However, sustained low interest rates and quantitative easing by central banks leave them no other choice than to diversify their investments beyond sovereign bonds if they want to be able to continue generating returns for the insurers, Rohweder explained.
Shipping debt at loan-to-value limits of around 50% could be a very safe option for them seeing that ships’ market values probably have only limited further downside potential in many segments, he said.