Irish ship finance could top $15 billion by 2010 Published: 31 October, 2007
Glenn Murphy, Director of the IMDO
IRELAND has established itself among the top fifteen international centres for the highly lucrative business of Ship Finance and Maritime Commerce. Since 2000, a number of Irish institutions have entered the ship asset and finance market, with the Irish Maritime Development Office (IMDO) estimating that the portfolio value of Irish ship financed assets is now close to $2.5 billion.
IMDO forecasts that based on current indicators, this sector of international commerce could increase in value to a $15 billion by 2010. To promote understanding of these new opportunities for Irish investors, IMDO is supporting the Marine Money Dublin Ship Finance & Investment Forum today in Dublin at the Four Seasons Hotel – an event which is usually hosted by other leading ship finance centres such as London, New York, Hamburg, Hong Kong and Singapore.
The Global ship finance market is a growing sector, said Mr Glenn Murphy, Director of the IMDO. In 2006, orders for new ships totalling $156 billion were financed, coupled with a further $80 billion in second-hand vessels. This is a dramatic expansion when compared to only four years ago when the annual market averaged out at $36 billion a year.
European ship owners are driving the purchasing spree, accounting for 38% of all new vessels purchased in 2006 and, since many of these new shipping assets require structured financing, the emergence of a dedicated niche sector in Ireland is very timely and opportune.
Ireland has already established a track record in asset-backed finance, particularly in the mobile asset market, with Dublin recognised as the leading centre for aviation lease financing in the world, says Glenn Murphy.
Several leading Irish-based financial institutions are already expanding their portfolios into shipping. Bank of Ireland are the largest shipping bank in the market at the moment, with a portfolio of more than $1.5 billion, with AIB, IIB, Ulster Bank, Fortis, and BNP all active from their Irish bases in this market.
IMDO believes that, based on the similarity of the structuring of these deals (i.e. the involvement of the leading finance/leasing/legal and accounting firms) that Ireland could emulate the level of activity in the aviation sector in 10-15 years time and complementing it as a key element of Irelands mobile asset finance market.
We are already seeing, just as in the early days of the aircraft leasing markets, strong growth in the ancillary ships commerce marketin accounting, legal services and ship broking, to support this growth, continued Mr Murphy. We believe that these services will continue to grow in line with core ship finance and aviation sector growth. Ireland has much to offer the shipping asset market. It is a stable, low tax environment, with a single currency where English is spokenwhich are the key elements this sector searches for as a minimum entry. Ireland also has a dedicated shipping tax regime and a government that is focussed on developing the services sector. Finally, Ireland is now starting to produce the technical and service skills in the finance and banking sectors that enable it to generate product delivery.
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