Performance Shipping Upgrades Bonds to Senior Unsecured Status
Event summary
- Performance Shipping amended its $150M 9.875% bonds to senior unsecured status from secured, releasing ship mortgages on P. Monterey and P. Sophia.
- Minimum liquidity covenant increased from $20M to $30M; one-time amendment fee of 0.325% paid.
- CEO cites fleet expansion (4 vessels added), reduced average age (6 years), and doubled backlog ($500M) as credit quality improvements.
- Average daily charter rate needed for obligations ranges from $0 in 2027 to $11,600 in 2029.
The big picture
Performance Shipping's shift to senior unsecured bonds reflects a strategic pivot toward leveraging improved creditworthiness amid industry-wide volatility in charter rates. The move aligns with broader trends of shipping companies optimizing capital structures as they navigate fluctuating demand and regulatory pressures. With a fleet now averaging 6 years and a $500M backlog, the company aims to position itself for long-term refinancing flexibility.
What we're watching
- Debt Refinancing Dynamics
- Whether Performance Shipping can sustain its improved credit profile to secure favorable refinancing terms by 2029.
- Charter Rate Volatility
- How fluctuating charter rates will impact the company's ability to meet cash obligations, particularly in 2028-2029.
- Fleet Utilization Strategy
- The pace at which Performance Shipping can maintain high utilization of its unencumbered vessels to support liquidity.