🚢 Private Credit in Ship Finance: The Rise of Alternative Maritime Lending

My name is Davide Ramponi, I’m 21 years old and currently training as a shipping agent in Hamburg. On my blog, I take you with me on my journey into the exciting world of shipping. I share my knowledge, my experiences, and my progress on the way to becoming an expert in the field of Sale and Purchase – the trade with ships.

For decades, ship finance was a predictable world: European banks, long-term loans, conservative underwriting. But the financial crisis of 2008, Basel III regulations, and ESG scrutiny have all combined to reduce banks’ appetite for shipping risk — especially when it comes to mid-sized or family-owned operators.

Enter private credit funds — a rising force in maritime finance that’s rewriting the rules of who gets funded, how deals are structured, and where capital flows.

Private credit is more than a buzzword. It’s become one of the fastest-growing areas in shipping capital markets, especially for owners who sit outside the “top tier” but still run modern, efficient, and profitable fleets.

🔍 In this post, I’ll walk you through:

📌 What distinguishes private credit from traditional ship lending

⚓ Why private credit is a game changer for mid-sized and regional owners

🛠 The risk-return profile and collateral expectations of private lenders

📊 Deal structures and trends in maritime-focused private credit

📈 What the future holds for alternative lending in the shipping industry

Let’s dive in and explore why private credit could be the lifeline — or the launchpad — for the next wave of ship finance.

💼 What Is Private Credit? Understanding the Fundamentals

Private credit refers to non-bank lending — debt investments made by institutional investors (like asset managers, pension funds, or family offices) outside of public capital markets.

In the maritime sector, this usually takes the form of:

• 🔒 Senior secured loans

• 🧾 Sale-and-leaseback structures

• 🧱 Mezzanine financing

• 💳 Credit lines secured by vessels or receivables

🚫 How It Differs from Traditional Bank Lending

Feature	Bank Loans	Private Credit
Lender	Regulated commercial bank	Fund or institutional investor
Risk Tolerance	Conservative	Flexible, yield-seeking
Tenor	5–10 years typical	2–6 years common
Speed	Slower approvals	Faster execution
Structure	Rigid (LTV, covenants)	Tailored to borrower profile
ESG Pressure	High	Growing, but varied

💡 In essence: 

Private credit brings speed, customization, and risk tolerance where traditional finance often brings regulation, bureaucracy, and hesitation.

🚢 Why Private Credit Works for Mid-Sized Shipowners

Global giants like Maersk or Cosco can tap public bond markets, IPOs, or strategic JV funding. But for smaller owners — say, running 5–25 vessels — access to capital has historically been more difficult.

🔑 Benefits of Private Credit for Mid-Market Operators

1. Tailored Terms

   • Loan structures can match cash flow profiles (e.g., backloaded repayments during retrofit period).

   • Financing available for secondhand acquisitions, which many banks avoid.

2. Faster Execution

   • Credit funds often close deals in 30–60 days — vs. 90–180+ for banks.

3. Fleet Expansion & ESG CapEx

   • Private capital supports retrofits, dual-fuel upgrades, or scrubber installations.

4. Sponsor-Backed Growth

   • Some private credit providers also co-invest in equity, helping grow fleet platforms.

📌 Real-world example:

A family-owned dry bulk company in Turkey secured $50M from a U.S. private debt fund to purchase two Ultramax vessels — a deal rejected by European lenders due to “insufficient scale.”

🎯 Result:

Full financing, quick execution, and upside sharing.

📊 Risk Appetite and Collateral: What Private Lenders Expect

Private credit is not charity — it’s return-seeking capital. But the risk tolerance is often higher than traditional lenders, and structures can reflect that.

🧱 What Do They Want?

1. Collateral

   • Modern, well-maintained vessels (often <15 years old)

   • Flag and classification registry that meets ESG or transparency criteria

   • Scrubber/dual-fuel retrofits often seen as value-add, not red flags

2. Sponsorship Strength

   • Lenders look for experienced owners, solid chartering history, and technical competence

3. Covenants & Control

   • Fewer financial covenants than banks, but tighter asset control (e.g., restrictions on sales, minimum charter coverage)

4. Returns

   • Target IRR: 8–14%, depending on asset type, loan tenor, and risk level

   • Often higher than banks — but still cheaper than equity or mezzanine

💡 Insight: 

Private lenders may accept higher LTV (Loan-to-Value) ratios — up to 75% — especially if the sponsor is co-investing equity or offering charter coverage.

📈 Trends in Maritime Private Credit Deals

Private credit is evolving fast in the maritime world. Let’s look at what’s shaping the space in 2024–2025.

🔄 Emerging Deal Patterns

• Asset-Backed Growth Capital→ Funds provide financing for fleet renewal tied to ESG upgrades

• Pre-Delivery Finance→ Capital for pre-delivery payments on newbuilds — a segment most banks shy away from

• Rescue Lending→ Opportunistic funding for distressed owners with valuable assets, often at discounted vessel valuations

• Revenue-Linked Structures→ Repayments tied to TCE or voyage earnings, giving owners flexibility in weaker quarters

🌍 Regional Hotspots

• 🇬🇷 Greece and Cyprus: Active borrower base with family-owned fleets

• 🇸🇬 Singapore: Hub for structured leasing and sale-leasebacks

• 🇹🇷 Turkey: Mid-sized dry bulk players finding success with alternative finance

• 🇺🇸 U.S. East Coast: Offshore and Jones Act tonnage attracting mezzanine capital

📊 Statistic: 

According to Marine Money, private credit deals now make up over 20% of all new ship lending transactions for vessels below $100M.

🔮 Outlook: The Future of Alternative Debt in Shipping

Private credit isn’t a temporary trend. It’s becoming a permanent fixture in the maritime finance ecosystem — especially as banks continue to retrench or shift focus to ESG-compliant mega-owners.

🔭 What We Expect to See Next:

1. Dedicated Maritime Credit Funds

   • More funds will raise shipping-specific strategies, often paired with in-house technical teams

2. ESG Integration & Carbon-Linked Loans

   • Lenders may tie interest rates to emission performance or CII scores

3. Secondary Trading Platforms

   • As private credit matures, expect more secondary sales of maritime loans among institutional investors

4. Increased Competition

   • More players = better terms for borrowers, especially those with high-quality assets

⚓ Conclusion: Private Credit as a Strategic Tool — Not Just a Last Resort

Private credit has shifted from being a niche solution to a mainstream financing tool for shipowners. For mid-sized fleets, modern tonnage, and ESG-driven capital projects, it’s often the most efficient and flexible route to scale.

Key Takeaways 🎯

✅ Private credit offers tailored, faster financing options than traditional banks

⚓ Ideal for mid-sized owners, retrofits, newbuilds, and growth deals

📈 Lenders are willing to take risk — but demand collateral and sponsor alignment

📊 Trends point toward ESG-linked loans, pre-delivery deals, and global diversification

🚢 The future of maritime finance is no longer just banks and bonds — it’s also funds and flexibility

Private capital is no longer the “alternative” — for many, it’s becoming the default.

👇 What do you thing?

Have you worked with alternative lenders, and how did the process compare?

💬 Share your thoughts in the comments — I look forward to the exchange!

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