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The determinants of the rate of return on shipping sale-leasebacks

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  • Sangho Yoon
  • Chi Yeol Kim

Abstract

This study investigates the determinants of the rate of return on shipping sale-leaseback (SLB) transactions. Since the credit crunch in the shipping industry after the 2008 crisis, SLB has emerged as an alternative funding source. However, little is known about the use of SLBs in the shipping industry. Therefore, this study analyzes 62 shipping SLB transactions occurring between 2017–2022. Examining 23 factors related to financial characteristics, firm- and vessel-specific aspects, and shipping market indices, this study finds that the SLB rate of return is negatively associated with the operating margin of a shipping firm, and this result is robust even when controlling for variations in the key interest rate. In addition, with winsorized values of the financial ratios that fluctuate during the sample period, it is also found that a lower rate of return is required for vessels with time-charters. The findings of this study provide shipping companies with valuable implications for understanding the cost of debt financing.

Suggested Citation

  • Sangho Yoon & Chi Yeol Kim, 2025. "The determinants of the rate of return on shipping sale-leasebacks," Maritime Policy & Management, Taylor & Francis Journals, vol. 52(1), pages 159-171, January.
    • Handle: RePEc:taf:marpmg:v:52:y:2025:i:1:p:159-171
    DOI: 10.1080/03088839.2023.2289489
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