Financing Structures & Capital Sources
Newbuilding Instalment Financing
Summary
Newbuilding instalment finance covers staged shipyard payments before delivery, when the financed vessel may not yet exist as usable mortgage collateral.
Why this matters in ship finance
The timing of advances and rights against the yard create credit exposures different from a post-delivery term loan.
The concept
Shipbuilding contracts specify milestones, inspection, title to work in progress, assignment and default remedies. Funding may include owner equity, construction loans or supported credits.
How it is used in practice
Build a milestone schedule with interest during construction, equity injections, delivery financing and delayed-delivery cases.
Practical issues
Do not assume instalment finance is secured by an enforceable ship mortgage over an unfinished vessel; assess local law and yard refund security.
How ShipFinance.ai uses this concept
Link contract milestones and drawdown conditions to a construction-period liquidity model.
Key takeaways
- Construction instalments precede operating cash flows.
- Refund and delivery security are fundamental.
- Delay shifts financing and earnings simultaneously.