Genco Shipping's New Bulk Carrier Leased at a Whopping Rate

It is heartening to see Genco Shipping (GNK) put on a new bulk carrier with Cargill for a minimum 4 year lease at a very nice rate. $65,000 per day!

There seems to be quite a disconnect between the rates earned by quality shipping companies putting their ships on long term contracts and those trying to earn revenue in the spot market.

The $65k is the highest daily rate of any of the ship in Genco’s fleet. With 3 more new ships coming on in 2009 this news bodes well for the company’s future prospects. And, hopefully, the dividend will be secure.

Disclosure: GNK is a component of my site’s hypothetical Opportunities Portfolio.

Comments

[Stanislav O...:]

Everything could be connected pretty easy. It's just necessary to make some digging before posting. This contract was signed months ago, when BDI was over 11000. 3 more ships coming are not so fortunate to have a secured long-term charter, so they will apparently have to try to earn revenue in the spot market. It has absolutely nothing to do with the quality of the company.

2008 Dec 31 08:24 AM

[coprophagous:]

Before you get too carried away $65.000 per day less 5% commision barely covers operating expenses and capital costs of a ship that cost $150m+ and is only worth $65m today.

2008 Dec 31 08:27 AM

[cartledge:]

Wow, the average non-professional investor really is clueless. At least he didn't name the company GenKo like others have.

2008 Dec 31 11:02 AM

[Tim Plaehn:]

Dang, GNK is up 17% today! On 900 million shares. Must be a lot of non-professional buyers. Oops, the stock is 80% held by institutional investors.

It will be interesting to see at what rate the next couple of ships lease out at but nothing is certain at this time.

2008 Dec 31 11:19 AM

[Tim Plaehn:]

Well I messed up part of my sharp response. Sitting now at 1 million shares traded. Counted too many zeros.

2008 Dec 31 11:28 AM

[Jackalope:]

I don't think you understand, Cartledge is calling you an amateur, not the owners of the stock. The shipping contract with Cargill was signed several months ago at much higher rates. Genco is just now delivering the newly built ship to Cargill at the previously agreed rate.

I suggest doing a little more homework before you post to Seeking Alpha

Jan 01 01:08 PM

[poor&unempl...:]

Genco did not purchase a vessel. It purchased a CASHFLOW. This is no different than any commercial real estate deal, where buyer purchases a fully occupied office building with a known cashflow.

In this case - Genco has effectively converted revolving cash facility into income stream. To keep a long story short for all the shipping experts on the wallstreet, who are investing other peoples money (mutual funds etc) - debt is not a income. If it walks like a duck, talks like a duck - it is a duck.

In the market, many first class charterers are reneotiating the contracts. What ever happend to the COMMON SENSE?

Jan 01 02:07 PM

[cartledge:]

Tim,

The good news was the delivery of the ship. Not the contract rate. The rate was negotiated months ago as someone else said. The previous guidance from Genco was that the ship would not be delivered till 2009. The delivery on time was a "surprise" that may have bounced the stock.

Once again - 0 due to the contract, much due to the fact that the contract will be honored.

Jan 02 11:58 AM

[sr9web:]

Drybulk shippers bounced too much this past week. I sold out and expect to re-enter for less $$ - possibly this week.

Jan 04 03:32 AM