Japanese financial services group Orix Corporation has confirmed the purchase of USD 289 million worth of shipping loans held by The Royal Bank of Scotland (RBS), adding that it plans to “accelerate investment in shipping loans.”
The market for global maritime trade has fallen into a prolonged downturn triggered by a slowdown in growth in China and a resulting decline in demand. Simultaneously with this decline in demand, the industry has been streamlined through consolidation of shipyards and shipping companies.
Orix said that these current market conditions are a “favorable investment opportunity,” and that it aims to increase activity in investment grade shipping-related loans held primarily in Europe, as well as to expand its business operations in the shipping sector.
The shipping loans purchased from RBS’ portfolio primarily consist of investment grade loans derived from the bank’s Greek shipping business.
Currently in the midst of a restructuring, the bank is selling its shipping loans in an effort to exit the sector and return to profit after eight straight years of losses.
Reports indicate that German Berenberg Bank also purchased around USD 300 million worth of loans from RBS.
Other financial institutions, including Bank of America Merrill Lynch, as well as investment management firm Davidson Kempner Capital Management, were earlier unveiled as potential buyers of RBS’ shipping loan tranches amounting to a total of USD 600 million.