Capital structure in shipping with a focus on bonds

Abstract

The purpose of this thesis is to analyze the methods by which shipping companies are financed and how their capital structures were formed in the pre and post global economic crisis of 2008. Major emphasis is placed on financing shipping companies buying bonds in order to establish whether this method of financing is prosperous for shipping companies as well being profitable for investors. Furthermore, this paper investigates the different factors have affected the default of rating bonds. The shipping industry, in the wake of the global economic crisis, has accepted many alterations to the ways of financing. Additionally, it can be mentioned that the proportion of financing by bonds has risen throughout the last decade making it a really significant fact for appraisal. Annual reports from the period of 2009 to 2016 have been used to establish the profitability and sustainability reported from the sample of shipping companies evaluated, in conjunction with data from stock markets for the regression analysis in order to obtain results for the default of rating bonds. The findings of this thesis present the viewpoint that companies are constantly turning to new funding methods and as a result of the economic upheaval, their preference is equity rather than debt financing. The issuance of bonds is a method of financing that has been on the rise throughout the eight years of analysis. The determinants that affect the spread price of new high yield bonds are the age of the firm, the gearing, the credit rating, the Baltic Dry Index and the float.