Credit Risk Measurement and Management in Shipping

Amir H. Alizadeh and Nikos K. Nomikos
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Amir H. Alizadeh: Cass Business School, City University
Nikos K. Nomikos: Cass Business School, City University

Chapter 12 in Shipping Derivatives and Risk Management, 2009, pp 399-424 from Palgrave Macmillan

Abstract: Abstract One of the most important types of risk to which market practitioners in shipping are exposed is credit risk. Credit risk arises because most of the deals, trades and contracts in shipping are on a principal-to-principal basis, which means that two parties agree to do business with each other and rely on each other’s ability to honour the agreement. The agreement could be a simple charter contract between a shipowner and a charterer, a newbuilding contact between an investor and a shipyard, or even a bunker transaction between a shipowner and a bunker supplier. In any case, parties to contracts can be exposed to each other’s ability to perform the contract, or to credit risk.

Keywords: Credit Risk; Credit Rating; Credit Default Swap; Default Probability; Corporate Bond (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-23580-9_12

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DOI: 10.1057/9780230235809_12

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