Cargo Business Newswire

Thursday, September 11, 2014

Drewry: U.S. interest rates will spur procurement of port assets

The expectation of higher U.S. interest rates will trigger a boost in the acquisition and refinancing of port assets over the next year, according to Drewry Maritime Advisors, Drewry’s port consultancy division.

The analysts project the target rate of the U.S. Fed will increase from its all-time low of 0.25 percent, and the prospect of higher borrowing costs will drive more acquisition activity sooner as investors seek to secure low financing rates before costs begin to rise. Port operators will want to refinance outstanding loans prior to any potential rates increase.

"We have already noticed this trend within our own portfolio of consulting projects," said Tim Power, director of Drewry Maritime Advisors. "Over 70 percent of our current consultancy workload relates to due diligence of port asset acquisition and refinancing assignments. Three years ago this activity represented less than 30 percent, indicating the growth in the scale of such transactions. We expect this trend to accelerate over the next 12 months as investors seek to lock into low rates."

The researchers project that port operators will try to get the jump on any upcoming hike in interest rates by engaging lenders to refinance or seek out new capital now. Meanwhile, potential investors will take advantage of the opportunity to evaluate port assets that may not otherwise have been available.

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