Media Coverage
Source: The Deal
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Olivia Thomas
08.16.16
Debtor-in-possession financings have become heavy lifting for debtors in the transportation industry even though postpetition funding costs on average for all industries have declined. The culprit is that DIP loans to credit-stressed shipping companies are pulling the pricing up.
Average pricing for DIPs, as expressed in basis points above Libor or prime on DIP loans, has declined overall for all industry groups year-to-date through August, vis-à-vis the corresponding period in 2015. But for transportation debtors, that pricing has increased. Insolvency & Restructuring partner Leo Crowley said the shipping industry as a whole is a credit problem, with the charter rates at an unsustainable level contributing to the problem.
"It doesn't surprise me that transportation would be priced high as a sector because the shipping industry is pulling it up," he said. "There's a huge surplus of cargo ships on the market, and as a result, charter rates for shipping are uneconomically low."