Pelagic Credit rejects deals as high ship prices deter lending

Oslo-listed Pelagic Credit is turning down financing deals as high vessel prices deter the lender from closing new business. The firm is prioritizing capital discipline over deal volume, though it has carved out an exception for two Suezmax tankers.

Pelagic Credit is rejecting deals because current ship valuations do not align with its risk appetite. Despite this broader pullback, the company recently finalized an agreement to finance two Suezmax vessels.

Why it matters

The decision by Pelagic Credit signals a growing gap between shipowner expectations and lender reality. When a maritime lender starts walking away from ship financing, it suggests that asset prices in certain segments have reached a level that debt service cannot comfortably support. This caution puts pressure on owners looking to expand or refinance, as they may be forced to provide more equity to secure traditional debt.

The Suezmax exception shows where the lender still finds value. While general prices are deemed too high for many deals, Pelagic Credit is cherry-picking assets where the earnings outlook likely justifies the entry price. This suggests the lender sees specific resilience in the Suezmax segment that is missing elsewhere.

For the wider industry, this move acts as a warning of a valuation ceiling. If lenders continue to balk at current prices, the market for vessel deals risks a slowdown as the capital required to close them becomes harder to source.

Source: ShippingWatch