Ship finance basics: All you need to know from a shipping lawyer’s perspective
Purpose of the financing Shipping is a capital-intensive industry, where depending on the type and size, a single ship can cost millions of dollars to construct or acquire. Traditionally, ship-owning groups have relied on bank financing to finance either the construction of new ships or the purchase of second hand vessels. Another common finance structure in shipping is also the utilisation of a new bank financing (granted on more favourable terms) to refinance an existing loan already linked to the construction or acquisition of the vessel. Whilst the structure of each deal may be slightly different depending on the current market or the credit worthiness of the shipping group, nevertheless, most ship finance deals will still follow one of the above structures. Typical structure of a ship finance loan Ship finance loans are by default secured asset-based financings. Therefore, as one would expect, the bank expects the loan to be repaid through the income of the ship and the bank’s se
