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Credit available for foreign owners

Credit available for foreign owners
Credit is now available to foreign owners from Chinese and South Korean government-owned banks, and at cheaper rates than from traditional European lenders.

Credit is now available to foreign owners from Chinese and South Korean government-owned banks, and at cheaper rates than from traditional European lenders.

Influential Taiwanese shipowner and operator Nobu Su has dismissed the widely held view that there is a struggle to finance the mammoth amount of newbuildings ordered at Asian shipyards.

?People think the amount of credit available for shipping is less than before, but we believe there is a lot of money available,? he said on Wednesday.

Mr Su"s privately held Today Makes Tomorrow has ordered nearly 40 ships, estimated to be worth more than $1bn ? including a fleet of 10 car carriers and nine oil/ore carriers ? mostly at South Korean yards. Delivery would begin in 2010, with all vessels financed, he said.

He said owners ?created a panic? when the financial crisis hit last September, accepting higher-cost credit from banks to fund vessels.

But credit was now available to foreign owners from Chinese and South Korean government-owned banks, and at cheaper rates than from traditional European lenders, Mr Su said.

Cancelled orders, delivery delays and a recovery in freight rates in 2009 for bulk carriers meant the sector ?probably has the best returns in basic industry? for banks, he added.

Those with ships under construction at ?quality yards? were likelier to access credit. Furthermore, most vessels ordered at the world"s top 10 yards did not need finance, he said.

Although exact estimates are unavailable, about half the world"s 8,945-ship orderbook is thought to be unfinanced, with broker RS Platou suggesting last month that as much as $250bn-$300bn of the $500bn forward orderbook still needed to raise loans.

Mr Su said owners ordered ships for delivery as far out as four years, instead of the traditional two years during the top of the shipping supercycle in 2007 and the first half of 2008. As a result, the amount required to finance the vessels appeared inflated and did not take into account that the money needed would be spread over a longer period of time.

Furthermore, he said it was in the interest of Chinese and South Korean governments to subsidise vital shipbuilding industries.

?The value of the asset will not collapse,? he said, adding that the more governments were involved in providing subsidies, the more they would ?ensure that the [ship] price will remain stable?.

With Chinese steel prices rising steeply recently, Mr Su forecast that prices for steel plate used in ship construction would rise, pushing up newbuilding prices.

Mr Su"s current operated fleet numbers 20 very large crude carriers and 50-120 bulk carriers. He declined to provide specific information.

He also offered a contrarian view on the global economy. With low inflation, low wages and low interest rates, ?we have never seen such a good economy in the last 30 years?, he said, forecasting a ?strong recovery?.

www.TurkishMaritime.com.tr

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