A Growing Pool of Capital
The global shipping industry has access to a broad pool of financing, from traditional bank loans to bonds, leasing arrangements and private credit. But the availability of capital does not mean that all shipowners can raise it on the same terms, or that every investment offers an attractive return. The key question is not simply how much financing is available, but who can access it, at what cost and with which risks attached.
Petrofin Research puts the loan portfolios of the world’s 40 largest shipping banks at $300.6 billion at the end of 2025, up 6% from $283.6 billion a year earlier. Total global bank lending stood at an estimated $425 billion, while the wider ship finance market, including leasing, export finance and alternative providers, reached approximately $680 billion.
Demand for funding remains strong. Clarksons Research valued the global fleet and orderbook at around $2.4 trillion in the first half of 2026. Newbuilding orders reached approximately $132 billion during the period, while secondhand transactions exceeded $35 billion.
Figures underline the market scale. For shipowners, however, the key question is how much financing they can secure, at what cost and with what obligations attached.
Banks compete for the strongest borrowers
Europe remains the largest source of shipping bank finance, accounting for $151 billion, or 50.4% of the portfolios covered by Petrofin’s top-40 survey. Japanese banks have also expanded their presence, increasing their share from 22% to 26%.
Competition is particularly evident in lending margins. In its 2026 outlook, Société Générale notes that margins of 100–150 basis points over SOFR are increasingly available to top-tier shipowners, particularly in Asia. With SOFR at 3.90% on 22 October 2026, this would imply an indicative rate of 4.9–5.4%, before fees and other costs, if calculated against that overnight benchmark.
Genco Shipping & Trading, for example, increased its revolving credit facility to $680 million in February 2026, retaining a margin of 1.80% over one-month SOFR. Petrofin’s research indicates that mid-sized owners may also obtain competitive margins, around 1.5–1.9%, when supported by strong parent guarantees and sufficient liquidity. These figures are not directly comparable across borrowers, but they illustrate how credit quality, liquidity and lender competition influence financing costs.
The amount that banks are willing to lend also varies. Traditional banks generally applied lower loan-to-value ratios than some Chinese, Japanese and Korean sale-and-leaseback providers and specialist funds. In certain transactions, the latter could finance 70–75% of asset value or more.
Higher leverage reduces the equity an owner needs to commit to an acquisition, but it also increases exposure if earnings or vessel values fall. Higher leverage allows shipowners to finance a larger share of a vessel’s purchase price through debt, reducing the equity they need to commit upfront. However, it also increases financial risk and can limit flexibility. Loan agreements may include covenants restricting dividend payments, requiring minimum liquidity levels or limiting additional borrowing. These conditions can constrain how freely owners use the cash generated by their vessels, even when earnings are strong. The cost of financing, therefore, depends on more than the interest rate and fees. Covenants and other contractual terms can be just as important, particularly when market conditions weaken and shipowners need greater financial flexibility.
Non-bank lenders are taking a larger role, particularly in newbuilding finance. Petrofin expects bank lending to grow only modestly in 2026 and 2027, with Asian leasing companies and other alternative providers gaining share. For shipowners, a wider choice of financing providers can improve access to funding, but comparing options requires looking beyond the amount and cost of financing to the covenants and other contractual terms that can affect financial flexibility.
Bonds and private money fill different needs
Shipping companies with access to public debt markets can raise capital through bond issues, with the Nordic high-yield market remaining an important source of funding for the sector. The market recorded €4.6 billion across 40 transactions in the third quarter of 2026, bringing issuance in the first nine months to €17.3 billion, in line with the record pace of 2025. The median spread stood at 474 basis points at the end of September.
Meanwhile, Greece is also seeking to strengthen its role as a source of capital for the shipping industry. The €100 million bond issued by Seanergy Maritime Holdings on Euronext Athens in July 2026 marked a notable development in the domestic market, while other shipping companies have tapped the Greek capital market through equity offerings. These transactions illustrate the range of funding options available to shipowners, although the cost and suitability of each depend on the terms of the financing and the risks assumed by investors.
Beyond bank loans and bond markets, shipowners can also turn to private credit, particularly when they need financing tailored to a specific vessel or transaction. Private credit has become an increasingly important source of financing, offering companies alternatives to bank loans and bond markets. It can take many forms, from loans secured against specific assets to more tailored financing arrangements, and typically comes at a higher cost than traditional bank funding. Shipping can nevertheless appeal to private credit providers because vessels offer tangible collateral and a potential source of recovery if a borrower runs into difficulty. This does not eliminate the risk: vessel values and earnings can fluctuate sharply through the cycle. But for lenders, the combination of asset-backed security and the potential for higher returns can make shipping an attractive use of private capital.
Direct comparisons are difficult, however. A bank margin, a bond coupon and an equity investor’s target return reflect different risks and positions in the capital structure. Private transaction terms are also rarely disclosed in full.
Risk becomes clearer when earnings fall
Strong freight markets can support higher vessel values and make debt easier to service. Once rates weaken, the financing structure becomes more important.
A vessel employed on a long-term charter to a financially strong counterparty offers lenders greater visibility over future revenue. A ship trading on the spot market is more exposed to freight-rate fluctuations, which can affect its ability to meet debt repayments.
This creates a trade-off between financing terms and commercial flexibility. Lenders tend to favour employment arrangements that provide predictable cash flows, supporting debt service and reducing uncertainty. Shipowners, however, may prefer to retain exposure to the spot market, allowing them to capture higher rates when market conditions strengthen. The choice of chartering strategy can therefore affect not only earnings, but also the terms on which a vessel can be financed.
Falling asset values can create additional pressure. An owner that has borrowed against a vessel at a high market valuation may face refinancing difficulties if prices decline. Depending on the loan terms, it may need to inject additional equity, repay part of the debt or sell the vessel in a weaker market.
For investors, strong operating earnings do not necessarily translate into attractive investment returns. The purchase price, financing costs and eventual resale value all shape the overall economics of an investment. Even a vessel generating solid cash flow may deliver a modest return if the initial price is too high.
The terms behind private shipping investments
For investors entering shipping through private markets, the structure of the transaction can be as important as the vessel itself. In a co-investment, the distribution of cash, allocation of responsibilities, decision-making rights and terms of an eventual sale all affect the outcome.
Investors also need to understand what happens if the vessel requires additional capital or performs below expectations. Asset backing provides an identifiable underlying investment, but it does not eliminate the risk of lower earnings or a decline in market value. This is where the structure of an investment becomes critical.
Ultimately, the availability of capital depends not only on investors’ willingness to finance shipping, but also on whether the terms work for both sides. Shipowners need financing they can support through the cycle; investors need to be compensated for the risks they take. The balance between those two requirements determines which projects get funded and at what price.
