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JP Morgan Gauges Navios Partners Firepower

|Includes: Navios Maritime Partners L.P. (NMM)

Navios Maritime Partners has amassed the firepower to add between six and 11 bulkers following a $100m fundraiser, JP Morgan says.

New York-listed Navios Partners became the latest bulker owner to seek growth capital in a rising market in a follow-on offering lead by Fearnley Securities.

While detailed use of proceeds have not been laid out, sources explain that the cash is for expansion at a company that does not have any debt amortization until 2020.

Noah Parquette of JP Morgan estimates that the owner will have a cash balance of $125m at the end of the first quarter.

The analyst believes $100m of that will be set aside for purchases, which when combined with debt financing hikes Navios Partners' firepower to $200m.

"So the company could conceivably buy 10 or 11 panamaxes or six to seven capesizes, depending on age," Parquette concluded.

Its move comes at a hectic time in the dry cargo sale and purchase market which has seen asset prices climb by15% in the past week, according to Frode Morkedal of Clarksons Platou Securities.

He notes that Clarksons now prices a five-year-old cape at $30m, up from $26m previously. At the same time, a five-year-old panamax has climbed by 10%.

However, five-year-old vessels would need to rise by a further 16% before reaching parity with the cost of newbuildings, Morkedal explains.

Disclosure: I am/we are long NMM.