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Global Ship Lease, Inc. Message Board

  • bunsen82 bunsen82 Dec 10, 2011 3:34 PM Flag

    CMA Bonds

    Haven't been to the board in a while. Good to see several still here from the 2009 days. I got in at the bottom but kicked myself for selling out at 2.52. Looks like I might have another chance to get back in. I think there is some downward pressure yet though so I am going to wait. I want to see what happens with CMA bonds. I think the downward pressure this last week has been due to the Moody's downgrade. I haven't seen it posted anywhere on the board.

    I am looking at purchasing around february or march so hopefully there isn't a big move upwards before then for me, but for everyone else I am sure they would be okay with it. Hope to be back on the board for a while. I do think short term this could trend to 1.5-1.75 range but you just never know when momentum will begin to turn around.

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    • The irony is that it takes a long time for the banks and everyone to negotiate etc. Personally, I believe by that time the container market will have turned (this, of course, is barring a total collapse of Europe where the banking system ceases to function).

      In 2008 the orderbook stood at 60% of the global fleet. It generally takes 3 years for the orderbook to get delivered. We are at that point today. Today's orderbook is at 30% of the global fleet and newbuild financing is scarce. If global growth continues at its current pace, I think we'll have soaked up oversupply. Additionally, if liners have half a brain, they'll lay up a bunch of ships and let profitability return. Or, they can bleed themselves to death and let the market constrain supply, their choice. But, my guess is by end of 2012 several liners will be on or over the brink if rates haven't lifted by then. And, I'm not talking about CMA here...I'm talking about the smaller players. So, profitability may well return before it's CMA's time so to speak. That's my view.

    • Edge, my scenario is a long term possibility. This all comes down to charter rates and visibility. That is why I am in no hurry to invest. I do not think there will be a meaningful increase in pps unless there is the January increase from the tax loss getting back into the stock. Unless you see something different, this is a long term play, which is how i invest. I invested in some options in JPM when the financial markets got crushed in August. Since then the financial sector has gone down slighly more. However my options are for January 2013 and deep in the money calls and have in the grand scheme of things, I have had just minor pain. I think things will improve drastically but that is my outlook it could change. In my honest opinion this means everything gets better including the shipping sector and GSL. I think this is the ultimate outcome, however the risk is still there for CMA default, and that is what is making me pause, even more so than in 2009 when a potential defualt was even more imminent.

    • The scenario your envisioning, in my opinion, wouldn't happen until end of 2012 or 2013. CMA meets with lenders in July, I believe. These things have a way of dragging on...

    • A sensible strategy. Good luck to you.

    • Cavalitica,

      To answer your question more directly, I would do both options you are referncing. Make a current calculation things get better, even though personally for me, I am going to wait another month or two, and then if judgement day comes, put another portion on GSL on that day.

    • If CMA were to go bankrupt, I am going to be a buyer on that day and wait and see what happens. I think the panic selling would be incredible and would be a great buying opportunity for two reasons. A. The best outcome is the charters are maintained. B. Even if charters are re-negotiated, I think GSL can muddle through and at the prices that an investor would purchase on that day, they could make a lot of money. The question is whether we get to that day or not. Who knows, a greedy part of me almost wants it to go bankrupt, but honestly I hope things get better in the industry and investor confidence can gradually be regained.

    • To put it bluntly Edge, I actually think a bankruptcy case for CMA gives more visibility for GSL. Even still you would have to go through the initially pain in pps.

    • Then the question becomes:
      Are you trying to pick a bottom and get this for dimes if CMA goes through reorganization and panic selling ensues? Or, do you go long here and short weaker carriers like CSAV that will be long gone before CMA goes to french courts...

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