Moody's man sees box ship seizures in six months to a year

TROUBLED Asian container shipping lines stand to lose ships in bank seizures because they can no longer meet financial obligations, says a top Moody's official in Hong Kong.

Moody's Global Corporate Finance vice president Peter Choy said bank foreclosures looked likely in six to 12 months as troubled shipowners lurch ever closer to insolvency.

"Operating losses, covenant breaches and declining market value of vessels have rattled nerves among banks," Mr Choy said in a Financial Times report.

Mr Choy's report on the Asia Pacific container trade comes after first half losses among Asian shipping companies, though it stressed that foreclosures were more likely to hit small to medium-sized operators with leased vessels.

While the rate of decline in container volumes was narrowing, any strengthening demand would be temporary, the result of the restocking of inventories drained in the downturn.

Mr Choy did not expect Asia Pacific container carriers to make a full recovery until 2012 because of excess capacity and slack demand accompanying reduced exports from Asia to Europe and America.

Increased demand, he said, would only prompt laid-up ships - some 12 per cent of world container tonnage - to flood the market, thus depressing rates again, and delaying the sector's recovery.

(Source: www.schednet.com)