Extended Operational and Trade Vocabulary

Ship Finance, Leasing and Maritime Capital Markets glossary (page 2)

The ship-finance vocabulary: acquisition finance and adjustable-rate loans over SOFR, the advance ratio against vessel value, the lending banks and investment houses, and the leasing, sale-and-leaseback, and bond terms. Grounds each term in the debt or equity instrument and the lender or capital market it belongs to.

385 defined terms.

Showing 135 on this page (page 2 of 2).

N

Nordic bond: Senior secured bond issued under Nordic high yield market practice.
Nordic Trustee: Oslo based bond trustee that acts on most Norwegian shipping bond issues.
NordLB: German Landesbank that historically maintained a large shipping book before substantial reduction.
Norinchukin Bank: Japanese cooperative bank active in JOL and JOLCO lender roles.
Norwegian Export Credit Guarantee Agency: Public guarantor since merged into Eksfin.
Norwegian High Yield Bond Market: Oslo centered high yield bond market that has long served shipping issuers.
Norwegian Project Finance: Equity heavy project structures placed through Oslo brokers to private investors.
NYSE Shipping Listings: Group of shipping companies listed on the New York Stock Exchange.

O

Offshore Support Vessel Loan: Loan secured by OSV tonnage, severely tested in the 2014 to 2017 downturn.
Operating Lease: Lease that does not transfer substantially all risks and rewards of ownership.
Optional Prepayment: Borrower right to prepay principal subject to notice and any break funding.
Oslo Bors: Norwegian stock exchange home to multiple shipping equities and bonds.
Oslo Bors Euronext Growth: Junior market segment of Oslo Bors used by smaller shipping issuers.
Out of the Money Swap: Interest rate swap with negative mark to market against the borrower.
OW Bunker: Danish marine fuel supplier whose 2014 collapse caused significant counterparty losses across shipping.

P

Pareto Securities: Financial services group whose shipping desk participates in equity, debt, and derivatives broking around freight markets.
Pari Passu: Equal ranking among creditors of the same class.
Pay in Kind Note: Note paying interest in additional notes rather than cash, used selectively in restructurings.
Performance Guarantee: Guarantee covering performance obligations of a counterparty in a ship finance transaction.
Permitted Indebtedness: Defined categories of additional debt allowed under a loan or bond covenant package.
PIK Toggle: Feature allowing an issuer to choose between cash and pay in kind interest payments.
Pledge of Shares: Security over the shares in a vessel owning subsidiary granted to the lender.
Polaris Shipping: South Korean dry bulk owner that has used sale and leaseback structures.
Pooling Arrangement: Agreement combining earnings of multiple vessels, often relevant to lender cash flow modeling.
Portfolio Sale: Disposal of a tranche of shipping loans by a bank, frequently to alternative investors.
Poseidon Principles: Framework for integrating climate considerations into ship finance.
Poseidon Principles for Marine Insurance: Analogous initiative for marine insurers.
Postponement Letter: Letter from a junior creditor postponing claims to those of a senior lender.
Pre IPO Round: Private equity round preceding a planned public listing of a shipping company.
Pre Payment Premium: Premium payable on early prepayment, common in fixed rate and capital markets debt.
Preferred Equity: Equity ranking ahead of common in dividends and liquidation, used in selected shipping deals.
Preferred Ship Mortgage: US statutory mortgage created under 46 USC granting elevated priority.
Pricing Grid: Schedule of margins linked to leverage or rating in a syndicated facility.
Principal Paydown: Scheduled or unscheduled reduction of outstanding loan principal.
Private Placement: Offering of debt or equity to a limited number of qualified investors.
Pro Forma Leverage: Leverage calculated giving effect to a proposed transaction.
Project Bond: Bond issued by a project SPV and secured by its assets and cash flows.
Project Broker: Norwegian originator that structures and places KS shipping projects.
Project Finance: Limited recourse financing in which lenders look principally to vessel cash flows.
Public Equity Raise: Issuance of common shares by a listed shipping company.

Q

Qualified Institutional Buyer: Investor category eligible under Rule 144A for restricted US bond purchases.
Quarterly Compliance Certificate: Certificate signed by the borrower confirming covenant compliance each quarter.
Quasi Equity: Hybrid instrument such as preferred stock or deeply subordinated debt counted as equity by some lenders.

R

Rating Trigger: Provision requiring action if a rated counterparty falls below a defined rating.
Refinance Risk: Risk that maturing debt cannot be refinanced on acceptable terms.
Refund guarantee: Bank guarantee securing buyer's pre-delivery instalments.
Registered Ship Mortgage: Mortgage formally recorded against a vessel at its flag state registry.
Registry Fee: Fee paid to a flag state for vessel registration and mortgage filing.
Release Price: Amount payable to obtain release of a vessel from a borrowing base or mortgage.
Repayment Holiday: Period during which scheduled principal repayments are suspended.
Repo Financing: Repurchase agreement used in shipping bond financing by certain credit funds.
Reserve Account: Cash account funded as additional credit support in a ship financing.
Restricted Payment: Distribution to shareholders limited by covenants in shipping debt instruments.
Restructuring Support Agreement: Agreement among stakeholders defining the terms of an out of court restructuring.
Revolving credit facility: Ship finance facility allowing repeated drawdowns.
Roll Over: Continuation of a drawn loan into a new interest period at the borrower's election.
RS Platou: Norwegian shipbroker and project finance house that merged with Clarksons in 2014.
Rule 144A: SEC rule enabling resale of restricted securities to QIBs, used by larger shipping bond issuers.

S

SACE: Italian export credit insurance agency.
Sale and leaseback: SLB, sale of vessel to a financier with concurrent lease back.
Schiffsbank: German term for a specialist ship mortgage bank.
Scotiabank Shipping: Canadian bank franchise with a shipping client coverage practice.
Secondary Loan Market: Market for trading shipping bank loans among institutional investors.
Secured Bond: Bond benefiting from collateral such as a ship mortgage.
Securitization of Charter Receivables: Structured finance technique using charter cash flows as collateral.
Selective Default: Default on one obligation while others are serviced, sometimes seen in shipping restructurings.
Senior Secured Loan: First ranking bank loan secured by a vessel mortgage and related security.
Senior Unsecured Bond: Bond without specific collateral that ranks pari passu with general creditors.
Settlement Agent: Agent handling cash flows on a syndicated shipping facility.
Share Pledge: Security interest granted by the parent over shares in the vessel owning subsidiary.
Shareholder Loan: Loan from sponsors to the operating vehicle, typically subordinated to bank debt.
Ship Finance International: Listed ship leasing company, now renamed SFL Corporation.
Ship Mortgage Act: US legislation under 46 USC governing preferred ship mortgages.
Shipowner Bond: High yield bond issued by a shipowning company.
Singapore Exchange: SGX, host to several shipping listings including container, tanker and offshore operators.
Sinosure: China Export and Credit Insurance Corporation, the principal Chinese export credit insurer.
SMBC: Sumitomo Mitsui Banking Corporation, a leading Japanese ship finance bank.
SMBC Leasing and Finance: SMBC group entity engaged in operating lease and JOL transactions.
Societe Generale Shipping: French bank shipping franchise.
South Street Seaport Capital: Boutique advisory and capital provider focused on maritime.
Sponsor Equity: Equity contribution from the project sponsor in a ship financing.
Spread Compression: Tightening of lending margins during favorable credit cycles.
Stamford Capital: US shipping debt advisory firm working on syndicated loans and capital raises.
Standard and Poor's: Credit rating agency rating selected shipping issuers and bonds.
Standstill Agreement: Agreement by lenders to refrain from enforcement during negotiation of a restructuring.
Star Bulk Carriers: NASDAQ listed dry bulk owner that has issued bonds and equity in international markets.
Stock for Debt Swap: Restructuring technique converting creditor claims into equity.
Sub Participation: Risk transfer technique where a participant takes economic exposure without becoming lender of record.
Subordinated Note: Junior note ranking behind senior obligations of the issuer.
Supplier Credit: Credit extended by a yard or equipment maker to a buyer, often backed by an ECA.
Sustainability Linked Loan: Loan whose margin steps up or down based on the borrower's sustainability performance targets.
Swap Breakage: Cost of unwinding an interest rate swap on prepayment.
Syndicated Loan: Loan provided by a group of banks under a common agreement.

T

Take or Pay Contract: Long term offtake contract sometimes referenced in LNG and gas vessel financings.
Tap Issue: Additional issuance under an existing bond series, common in Nordic shipping.
Tax Lease: Lease structure designed to monetize tax depreciation for an equity investor.
Technical Default: Covenant breach not involving payment failure but still constituting an event of default.
Tenor: Maturity of a loan or bond.
Term Loan B: Institutional term loan tranche, occasionally used by larger shipping borrowers.
Term Sheet: Indicative summary of the principal commercial terms of a ship financing.
Time Charter Backed Loan: Loan sized against the contracted cash flows of a long term time charter.
Tonnage tax: Alternative tax regime based on ship tonnage rather than profits.
Top Up Equity: Additional sponsor equity injected to maintain loan to value compliance.
Total Return Swap: Derivative referencing a bond or loan, used by some credit investors.
Tranche A: Senior tranche in a structured shipping financing.
Tranche B: Junior or mezzanine tranche in a structured shipping financing.
Treuhandgesellschaft: German trust company holding limited partnership interests in KG funds.
Tsakos Energy Navigation: NYSE listed tanker owner that has issued preferred stock and senior notes.

U

UBS Shipping: Shipping finance and capital markets capability inherited and expanded following the 2023 Credit Suisse acquisition.
UK Export Finance: Modern name of the UK export credit agency, successor to ECGD.
Underwriting Commitment: Bank undertaking to provide funds even if syndication is incomplete.
Unencumbered Vessel: Vessel free of mortgage and other registered security.
United Nations Principles for Responsible Investment: Framework signed by asset managers including those allocating to shipping.
Unitranche: Single loan tranche combining senior and junior characteristics, used selectively in shipping.
Upfront Equity: Equity required to be contributed at closing of a project financing.
US 144A Bond: Restricted US bond placed to qualified institutional buyers under SEC Rule 144A.
US Coast Guard National Vessel Documentation Center: US authority maintaining the federal vessel registry where preferred mortgages are recorded.
US Ex-Im: Common abbreviation for the Export Import Bank of the United States.

V

Valuation Mandate: Engagement of an approved broker to value a vessel for covenant testing.
Vega Asset Management: Norwegian and London linked manager active in shipping credit and equity.
Vessel Insurance Endorsement: Standard clause naming the mortgagee as loss payee on hull and machinery cover.
Vessel Mortgage Discharge: Removal of a registered mortgage from the ship registry on repayment.
VesselsValue: Vessel valuation and data provider widely used by lenders and owners.

W

Waiver Fee: Fee paid to lenders for consent to a deviation from facility terms.
WAR Risk Insurance: Cover for war and strikes perils excluded from hull policy.
Warehouse Facility: Bridge facility used to accumulate assets pending term financing.
Warrant: Right to subscribe for shares at a fixed price, used in some restructured shipping deals.
Wells Fargo Equipment Finance: US lender active in inland marine and Jones Act tonnage finance.
Working Capital Facility: Short term facility supporting day to day operations of a shipping company.
Write Down: Reduction in the carrying value of a vessel or loan on the holder's balance sheet.

Y

Yard Installment: Scheduled payment from a buyer to a shipyard during the construction period.
Yard Vendor Financing: Credit extended by a shipyard, sometimes alongside an ECA wrapped commercial loan.
Yield to Maturity: Internal rate of return on a bond held to its scheduled maturity.

Z

Zero Recourse Loan: Loan in which the lender has no claim beyond the pledged assets, distinct from limited recourse structures.
Zero-Coupon Bond: Discount instrument occasionally used in ship finance structures.