Ship Finance Fundamentals
The Life Cycle of a Shipping Loan
Summary
A shipping loan moves through origination, due diligence, approval, documentation, drawdown, monitoring, amendment, refinancing and discharge or enforcement.
Why this matters in ship finance
The risk profile changes as the ship is delivered, employed, maintained and ultimately sold or refinanced.
The concept
Loan origination includes borrower and vessel due diligence, credit assessment, independent valuation, term sheet, collateral arrangements and conditions precedent. Monitoring covers debt service, covenants, valuation, insurance, sanctions and technical performance.
How it is used in practice
Maintain a dated lifecycle checklist with data owners, approval gates, payment calendar, reporting obligations and maturity/balloon planning.
Practical issues
A signed facility agreement does not equal a funded loan: drawdown depends on satisfying or properly waiving conditions precedent. Final repayment does not itself cancel registered security.
How ShipFinance.ai uses this concept
Connect pre-close checklist, covenant dashboard, refinancing alerts and security release tasks.
Key takeaways
- Treat origination and monitoring as connected
- Plan balloon repayment well before maturity
- Security release requires its own legal process
Primary legal, rule and scholarly sources
- Schinas & Kewitsch (2015), Loans and Risk Management Considerations, in BK3 - scholarly chapter
- Schinas, Grau & Johns (eds.), The HSBA Handbook on Ship Finance (Springer, 2015) - scholarly reference, not legislation
- EBA/GL/2020/06 - Guidelines on loan origination and monitoring (in-scope institutions; supervisory guidance)
- Loan Market Association - contractual loan documentation practice; not law