Understand the substantial benefits and risks of equity and debt finance to shipping companies looking for capital and to investors looking at shipping as a market.
With access to more traditional finance limited, shipping companies are increasingly considering private equity and debt markets as a way to help them make key capital investments, whether meeting new emissions legislation or ballast water management controls or expanding their fleet to meet new opportunities. Likewise, many investment banks and bond traders are becoming alert to the significant opportunities in the sector.
The course aims to raise awareness of the substantial benefits and risks of equity and debt finance to shipping companies looking for capital and to investors looking at shipping as a market with increasing accessibility and potentially strong returns on investment.
Led by Professor Nikos Nomikos of the Centre for Shipping, Trade & Finance at Cass Business School, Ship Finance Executive provides an analysis of the IPO and debt issuance process, the advantages and disadvantages of using the capital markets, underwriters and their role, credit rating agencies, and institutional investors.
Using a variety of real-life examples, course participants will learn how an IPO is made, what to look for when choosing an underwriter, how to identify an under-priced IPO before it is made public using only publicly available information, how to issue a high-yield bond and how to calculate the probability a high-yield bond will default.
Equity Capital Markets
Introduction to ship finance
Overview of the sources of finance available to shipping
– Equity finance (owner’s private equity, retained earnings, public or private equity offerings)
– Mezzanine finance (preference shares, warrants, convertibles)
– Debt finance (bank loans, export finance, public or private bond issues, leasing)
Equity Public Offerings
Traditional versus liberal philosophies towards vessel ownership and the main reasons why a shipping company
might list publicly
– Overview of the advantages and disadvantages for shipping companies which go public
– How to choose an underwriter and their role in the IPO process
– Taking a shipping company public: the IPO process
– Key factors which play a role in the success of an IPO
– Institutional investors and shipping companies
IPO Case Study
During this session, the group will make a practical analysis of an IPO, looking at the deal structure from an investor’s point of view; what are the strengths and
weaknesses of the company going public; was the timing of the offering correct; the choice of the underwriter(s); the success of the issue
Pricing of Initial Public Offerings
The under-pricing of shipping stocks and theories explaining the phenomenon
– Factors which may affect first trading day returns of shipping stocks
– Identifying IPOs for investment: how to estimate the probability of an IPO being under-priced before issue
– Practical example: illustrating how to calculate the probability of under-pricing using information available publically before issue
The High-Yield Bond Market
Risk Management of Real Assets
High-Yield Bond Issues
– Main advantages and disadvantages of using the shipping high-yield bond market
– The process of issuing high-yield bonds
– The role of credit rating agencies and the factors they consider when assigning ratings
– High-yield bond defaults and restructuring options in shipping
Probability of Default for High-Yield Bond Issues in Shipping
– The main factors affecting the probability of default for shipping issues
– Employing readily available information to estimate the probability of default prior to issue
– Practical example: calculating default probability Portfolio Management of Shipping Loans
– Risk models and quantitative risk analysis of shipping loans
– Project risk management
– Cash flow evaluation for a shipping project
– Case Study: Excel-based risk evaluation of a shipping loan portfolio
– Quantifying shipping sentiment using market variables
– Sentiment and shipping cycles: how to predict shipping cycles with the aid of shipping sentiment
– Practical example: illustrating how the probability of expansion/contraction may be estimated using shipping sentiment
– Using sentiment as a trading tool for the purchase and sale of second-hand vessels
– Practical example: using shipping sentiment in the investment decision for sale and purchase of second-hand vessels
Professor Nikos Nomikos, Centre for Shipping, Trade & Finance, Cass Business School
Dr Nikos Papapostolos, Centre for Shipping, Trade & Finance, Cass Business School
Ship Finance Executive is led by Professor Nikos Nomikos of Cass Business School, director of the highly-respected Shipping, Trade and Finance MSc course and author of the leading reference book on shipping risk management – Shipping Derivatives and Risk Management.
Professor Nomikos holds a number of faculty positions at other universities, including Copenhagen Business School and the University of Geneva.
Dr Nikos Papapostolou has worked on topics such as shipping high-yield bonds and shipping IPOs and is currently working on investor sentiment in the shipping markets.
£1575 + VAT (where applicable)
Contact Shena Cheng to book your place. Email: firstname.lastname@example.org
To view the full 2020 Baltic Exchange Academy Programme, click here