The prospects of bond-issuing shipbuilders

摘要

Shipbuilding is a capital intensive endeavour. The capital demand of shipbuilders is comprised mainly of capital expenditure required for expanding production and working capital for making advance payments. Between 2005 and 2007, shipbuilders were keen to invest in expanding production and capital demand in that respect reached its peak. In the advent of the global financial crisis in 2008, as the industry held back investment in expanding production, capital demand dropped notably. However, with the industry's prosperity index as well as the proportion of pre-payment receipts dropping since 2008 and advance payments to be made, the working capital demand of shipbuilders has climbed markedly.