Securing Ship Finance Transactions in the UAE

Analysis

Bank financing of new and second-hand ships remains the leading source of finance for shipowners. This traditional source of finance has been forced to adjust to a new era of shipping over the last several years. The current market is characterised by increasingly volatile (and generally depressed) freight rates, increased sources of finance coupled with an excess of available capital, and consequent oversupply of tonnage. Market conditions have placed tremendous pressure on many owners, and lenders routinely find themselves consumed with tending to defaults and restructurings.

The current state of affairs has encouraged lenders to more carefully assess how they secure the facilities they provide. Lenders are becoming increasingly aware, and concerned, about the effectiveness of their standard securities. Here the authors consider ship finance in an UAE context, with a focus on securing debt financing transactions.

Registration of Vessels