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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    A "Perfect Storm Is Coming" Deutsche Warns As Baltic Dry Falls To New Record Low

    Lobo
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    A "Perfect Storm Is Coming" Deutsche Warns As Baltic Dry Falls To New Record Low Empty A "Perfect Storm Is Coming" Deutsche Warns As Baltic Dry Falls To New Record Low

    Post by Lobo Tue 05 Jan 2016, 4:50 pm

    A "Perfect Storm Is Coming" Deutsche Warns As Baltic Dry Falls To New Record Low

    Submitted by Tyler Durden on 01/05/2016 09:45


    Following disappointing China PMI data and a collapse in US ISM Manufacturing imports data, the fact that The Baltic Dry Index has collapsed to fresh record lows will hardly be a surprise to many. However,as Deutsche Bank warns, a "perfect storm" is brewing in the dry bulk industry, as year-end improvements in rates failed to materialize, which indicates a looming surge in bankruptcies.


    At 468, The Baltic Dry Index is now at a new record low...


    And US Manufacturing imports suggest things are getting worse, not better...


    Which leads Deutsche Bank to warn of...A Perfect Storm Brewing

    The improvement in dry bulk rates we expected into year-end has not materialized. And based on conversations we've had with several industry contacts, we believe a number of dry bulk companies are contemplating asset sales to raise liquidity, lower daily cash burn, and reduce capital commitments. The glut of "for sale" tonnage has negative implications for asset and equity values. More critically, it can easily lead to breaches in loan-to-value covenants at many dry bulk companies, shortening the cash runway and likely necessitating additional dilutive actions.


    Dry bulk companies generally have enough cash for the next 1yr or so, but most are not well positioned for another leg down in asset values


    The majority of publically listed dry bulk companies have already taken painful measures to adapt to the market- some have filed Chapter 11, others have issued equity at deep discounts, and most have tried to delay/defer/cancel newbuilding deliveries.


    The additional cushion, however, is likely not enough if asset values take another leg down; especially given the majority of publically listed dry bulk companies are already near max allowable LTV levels.


    The move to sell assets in unison can lead to a downward spiral, where the decline in values leads to an immediate need for additional equity to cure LTV breaches.

    Source: Deustche Bank

    http://www.zerohedge.com/news/2016-01-05/perfect-storm-coming-deutsche-warns-baltic-dry-falls-new-record-low

      Current date/time is Sun 26 May 2024, 11:08 am