SHIPPING deals this year are unlikely to match 2021 which set a record for raising equity and high-yield debt in the US markets, according to investment experts.

“Equity markets are down about 75% year-on-year,” DNB Markets managing director James Cirenza told a Capital Link panel. “There is some activity for shipping, but let’s not kid ourselves. This has been a tough start to the year. The window will be open a few times this year and companies just need to be ready.”

Citi managing director and head of maritime investment banking Christa Volpicelli agreed.

“We think companies will have access [to the market] but it is certainly a volatile backdrop,” she said. “I think we are in for a year like 2018. I think there will be windows of opportunity and deals will get done. Access to capital is always a strategic advantage, particularly in the shipping sector.”

Chris Weyers, head of maritime investment banking for Stifel, estimated that the level of interest in shipping was “at least three times what it was this time last year” and was focused chiefly on the liquefied natural gas sector but with interest too for dry bulk and other shipping markets.

“We have never had so many calls coming in to discuss shipping as right now,” he said, adding that actual activity was still down “dramatically.”

“The markets are open, but most shipping companies are choosing not to raise equity capital. Given their cashflows they do not need to raise capital at the moment.”

According to Omar Nokta, the head of US securities for Clarksons Platou, there is a move from investors returning to the industry.

“For the past decade or so we have had a real lack of investment. A lot of investors left and focused on other things. Now it seems the investor pool is getting bigger again.

Mr Nokta said that it felt like “a similar environment” to that leading up to the super-cycle of the mid-2000s.

“We have just been through a tough time and a lack of investment has created a tight shipping market. The demand side has been missing for some time and the supply side was cleaning itself up, leading to much stronger earnings.”

He noted that for the dry bulk sector 2021 was the best year since 2007-08 “and all without the help of China.” It had proved that robust Chinese demand of proportions similar to 15 years ago need not be the sole arbiter of a good dry bulk market.

BTIG head of maritime research Gregory Lewis saw the ebb and flow of enthusiasm for shipping investments as a product of results.

“I don’t think it is that investors are not interested,” he said. “These companies have not been profitable. It’s not been a lack of interest but a lack of cashflow.

“There has been a lot of blood in the water in the shipping industry. All that being said, I would not look at any of these sectors on a historical basis. The next couple of years look pretty attractive.”

He noted the increased importance of environmental, social and governance criteria for investors but noted that there may be a degree of re-evaluation in the market under the shadow of the war in Ukraine.

“People are wondering — did they perhaps go a bit fast? But ESG is here to stay,” he said.

There was some divergence in views among the speakers on Capital Link’s capital markets and analysts’ panels.

According to Mr Weyers, ESG had been generating “a lot of questions” among investors. He said that as recently as 18 months ago ESG was a non-topic of discussion in US investor circles.

“Now it is overwhelmingly talked about in deals. In M&A transactions for hedge funds it has become a huge focus.”

Indicative of this was that the number of funds prepared to invest in tanker shipping, which was always small, “is dramatically smaller now”.

Certain limited partnerships were “staying away from any non-ESG-friendly investment”, he said.

But others said that the outbreak of war in Europe had had an effect.

“There has been a big change in the last month,” said Magnus Fyhr, managing director and head of maritime research at HC Wainwright. “People are thinking maybe we have gone a bit fast into ESG and maybe we need to harness all resources. There is a little rethink now and maybe not such tight guidelines going forward.”

Randy Giveans, head of energy maritime, shipping equity research at Jefferies, said it is “not as prevalent a topic as it was six months ago”. He perceived “a pullback” in terms of ESG focus and a sense that for the time being “there are bigger fish to fry”.