Tanker values are tanking

A transaction in early October saw Nordic American Tankers acquire a 2002-built suez¡max crude oil tanker, later identified as a vessel from the Tsakos Energy Navi¡gation fleet, for USD51.5 million.

Brokers noted that this price represented a drop from previous sales at USD55 million for vessels of this size and vintage.

In the aframax sector – a poor performer throughout much of 2009 – New York broker Compass Maritime noted the sale of Pacific Aquarius to Greek interests at between USD19 million and USD20 million. "It's a new benchmark transaction for crude oil tankers, esp¡ecially for modern tonnage in the aframax sector," Compass said in a report. With demand only just beginning to recover from recessionary pullback, and crude oil and product inventories at historically high levels, the once-vibrant tanker sector has languished.

Drybulk sector

The drybulk market – a sector in which asset values took a major hit in late 2008 and early 2009 – is on the rebound as Chinese ore importing has boosted demand. Still, when analysts take a closer view of listed companies, comfort level hinges on the likely ability to fund future capital expenditures.

One highly regarded drybulk company is SafeBulkers, an operator with a fleet of 14 modern bulk carriers and four newbuildings to be delivered during 2010-11. Analysts at Jefferies & Co laud the company's solid coverage prospects as follows: "When combined with the company's current cash on hand of USD128 million, we believe SafeBulkers should easily be able to satisfy its capital expenditure obligations in 2010 of USD137 million, and its debt repayment obligations in 2010 of USD15 million, leaving ample cash to continue paying its annual dividend of USD33 million."

Seanergy Maritime, another drybulk company and closely allied with Greece's Restis family, has renegotiated with its lenders after the huge slump in ship values earlier in the year. The Nasdaq-listed company has sought to position itself for the market upside after nearly doubling its fleet to 11 vessels through an acquisition of five vessels from a major energy trading company.

The trade-off is the near-term challenge of chartering out its vessels – where charters have expired – at sufficient levels to continue meeting debt service.