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Alternative financiers also continue to play a cru-
cial role in the market, serving niche segments and
structures that may not align as well with traditional
banking criteria.

What will the impact of Basel IV be?
Going into effect on 1 January 2025, Basel IV, which
refers to the latest updates and revisions to the
Basel Committee on Banking Supervision’s regu-
latory framework for banks, will require Eurozone
banks to hold more capital.
That will inevitably lead to higher pricing and a likely
shift in focus towards larger corporates, which are
deemed as lower risk under the standardised rating
approach of Basel IV.
It will be interesting to observe whether this will
push certain banks towards higher-risk transactions
to sustain higher financing costs or prompt them
to reduce their lending.

How sophisticated is shipping finance in Greece?
The Greek shipping market is well-equipped to
attract global financiers, with Greek shipping com-
panies being sophisticated and proactive in explor-
ing all available financing options. From straightfor-
ward bilateral facilities to more complex structures
like ECAs, sale and leaseback transactions, JOLCOs,
and sustainability-linked facilities, the Greek market
is dynamic and diverse.

Are sustainability-linked and green loans promi- the target is met. The targets will have to be more
nent in Greece? ambitious than what is set under relevant regula-
Environmental, social, and governance (ESG) fac- tions and regimes, such as the CII regime.
tors, particularly the environmental aspect, are Moreover, we have documented several sustaina-
becoming increasingly critical for shipping finance. bility-linked loans with diversity-related KPIs, such
At the approval stage, ESG considerations have as the number of women holding leadership roles
become integral to assessing borrowers’ credit- in the company. This is indicative of the industry’s
worthiness. Moreover, throughout the life of a loan, commitment and efforts to move the needle when
lenders typically require compliance with the Posei- it comes to increasing diversity. It has been great
don Principles, the EU Ship Recycling Regulation, to see financiers support such efforts.
and the Hong Kong Convention. Given the increase in financing costs, banks are
There is also a range of sustainable finance prod- already struggling to offer the lowest possible mar-
ucts available. The most common ones in the Greek gins to top-tier owners so as to remain competitive
shipping market are sustainability-linked facilities. in the current environment of improved liquidity
We have documented several such transactions in for owners. Offering a sustainability-linked margin
the past couple of years for both private and public may, therefore, allow banks to offer more com-
companies and expect an even higher volume going petitive terms. Whether a company will choose to
forward. enter into such financing arrangements will depend
Sustainability-linked loans will typically measure on their appetite to work towards more stringent
the borrower’s performance against certain sus- ESG targets and disclose such information to their
tainability Key Performance Indicators (KPIs), financiers.
often related to environmental matters such as Additionally, we expect the emergence of a broader
the vessel’s Annual Efficiency Ratio (AER), which range of finance products in this field, especially
is measured by dividing the vessel’s annual carbon as companies look to finance the acquisition and
emissions by its total annual deadweight distance. installation of equipment related to carbon emis-
The facility agreement will set a target AER and will sion reduction, such as onboard carbon capture
have a margin ratchet, offering a lower margin when equipment (OCC Equipment). Such equipment will

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