SHIPPING FINANCING METHODS AN INOVATIVE FINANCING METHOD Essay

SHIPPING FINANCING METHODS AN INOVATIVE FINANCING METHOD - Essay ExampleThe raptus company needs to show they can provide the necessary collateral in order to finance their ventures.With the expansion of modern economics, financiers, by using financial engineering, have created many sophisticated financing methods. The source of shipping finance that is more appropriate for a particular shipping company depends upon the type of company, its capital structure and the companys estimated profitability for the future. Of course, shipping investments bespeak funds well beyond any retained earnings. Furthermore, additional financing will be needed for further expansion of the company.The shipping industry traditionally relied on commercial banks financing the capital needs. Shipping companies because of their ability to raise the funds needed through bank financing were not very old(prenominal) with public offerings.In the last decade with the crisis in the shipping industry, tradition al sources of shipping finance have played a more streamline case than in the past and the importance of less traditional shipping finance sources such as capital markets has increased. This has been shown by the growing importance of public offerings and common soldier placements for the purposes of raising primarily equity and debt funds in the capital markets over the second part of the 1980s and the early 1990s.The availability of debt finance has proved sure-fire in prosperous markets. However, when the return on assets exceeded the cost of debt during the shipping crises of the 1970s and 1980s, the return on assets became greatly exceeded by the costs of debt, causing many difficulties with debt servicing. virtue reduces the financial risk from the use of debt as opposed to business market risk, generating from the fluctuations in revenue and cost levels.Innovative sources of ship finance cannot only kick down to the industry equity base, but also supplement debt funds fr om traditional sources. In traditional financing, a percentage of 80% is