Why ship finance will keep steaming ahead in 2026

With strong tailwinds still in place, ship financing looks set to remain a borrower’s market in 2026. 

The ship finance market – debt backed by vessel mortgages and repaid from ship earnings – has been riding the crest of a wave over the past five years, boosted by shipowners’ stellar financial results and a sustained upswing in global shipping markets. 

Since 2020, the market has been very dynamic and is now estimated to exceed USD 400 billion of outstanding debt, including approximately USD 55 billion of bank and bond debt raised in 2025 alone.¹  Shipowners have been enjoying a wider choice of options to finance their activity from a diversified financing ecosystem, as more debt providers enter the market. 

While established international shipping banks have remained consistently active, many regional Asian and European banks have expanded their exposure to the sector in recent years. Leasing houses, predominantly from China and Japan, have steadily increased their market shares. State-controlled export credit agencies (ECAs) continue to play a key role in financing newbuilding programs to support domestic shipyard activity.

Smaller shipping companies have also tapped into private credit funds with a higher risk appetite. On the public side, there has been noticeable activity in the high-yield shipping bond market in 2025, like in the previous year.

Looking ahead, we expect supply and demand for ship finance to remain buoyant in 2026, as structural tailwinds for the sector remain in place. 

On a rising tide

This abundance of liquidity essentially reflects the strong performance of the shipping industry since the end of the pandemic, with shipowners generating significant profits and strengthening their balance sheets. After an exceptional boom in 2020-2022, shipping markets have largely “normalized” since 2023, but vessel values, freight rates and vessel earnings remain well above pre-pandemic levels, underpinned by sustained global economic and resilient trade volumes over this period. It’s also fair to say that geopolitical disruptions have to date supported the shipping industry – albeit unintentionally – by creating ton mile and adding vessel utilization through route diversions, port congestion and longer sailing distances. 

Debt conditions are currently tilted in favor of borrowers: high loan volumes are available, interest margins are low (partially offsetting higher post-COVID base interest rates), while loan tenors and repayment profiles are generally long. Ship finance is backed by tangible collateral that is well recognized by lenders and their regulators, including mortgages, assignment of insurances and, in certain cases of vessel earnings. Moreover, early debt repayments from cash-rich shipping companies have been frequent, intensifying competition among lenders for new debt facilities. 

Today, it’s not uncommon to hear in the shipping finance community that credit margins in the 100-150 basis points range over the reference rate SOFR (Secured Overnight Financing Rate) are increasingly observed for top-tier shipowners, especially in the ultra-competitive Asian loan market. Such pricing offers lenders lower compensation for the risk they take than during the 2010-2020 period. The spread premium paid by smaller shipowners has also tightened considerably, to the point where, in selective cases, one may question whether risk is being adequately priced. 

Liquidity is particularly abundant for modern vessels with lower greenhouse gas emissions - typically dual-fuel ships and environmentally optimized units. This reflects many lenders’ focus on disclosing their efforts to align their loan portfolios with the International Maritime Organization (IMO)’s ambitious decarbonization trajectories, as used under the Poseidon Principles initiative, now well-established in their sixth year of existence.²

Remaining supportive, while vigilant as markets evolve

All this supports a positive outlook for ship finance in 2026. However, the shipping industry will most likely see some asset value and revenue correction in certain oversupplied segments this year, such as large container ships. The main shipping sub-segments (tankers, bulkers, containerships and gas carriers) will perform differently depending on geopolitical factors like trade tariffs and port fees, as well as environmental regulations, like the outcome of the IMO’s net-zero framework and associated taxation mechanisms, voting of which is suspended until end 2026. 

The reality is that many shipowners are currently cash-rich and have strong balance sheets with relatively low leverage and substantial liquidity buffers. These factors position them well to absorb dips in revenues due to deteriorating market conditions. 

At the same time, experienced shipping bankers will remember that “aggressive” financing structures during upcycles – such as high loan-to-value ratios based on elevated ship values with limited debt amortization – can ultimately result in credit restructurings and even loan defaults if earnings and vessel values fall materially. Shipping debt terms will inevitably tighten and reprice if shipping companies experience these conditions over an extended period of time. 

We do not expect any such debt tightening over the next 12 months, as most borrowers and lenders have incorporated comfortable financial buffers, allowing room to navigate potential cyclical softening. 

Shipping debt supply should remain plentiful and attractively priced in 2026, as lenders (banks, lessors, ECAs, bond investors) show no signs of reducing their appetite, based on the excellent recent track record of the industry and the strong overall credit quality of the borrowers in what remains a highly relationship driven sector. Lastly, demand for ship debt, which is mostly USD-denominated, could be further encouraged by anticipated interest rate cuts from the U.S. Federal Reserve in 2026, as per current market consensus.

Societe Generale has been supporting the maritime industry for more than 40 years and is one of Europe’s leading shipping lenders. Beyond financing, we have a well-established team of dedicated sector specialists advising maritime players on mergers and acquisitions and a wide range of fundraising solutions within our Sustainable Transportation Solutions platform.³ Societe Generale has also been a leader in environmental transparency in the ship finance sector, as a co-founder and now chair of the Poseidon Principles. 

While fully cognizant of the shipping industry’s inherent cyclicality and the possibility of market corrections, we remain optimistic and are committed to supporting the industry through 2026 and beyond. 

<sub>1. Including financings of cargo shipping and offshore services, excluding passenger shipping.
2. The sixth annual disclosure report of the Poseidon Principles is available here
3. Sustainable Transportation Solutions - Societe Generale Wholesale Banking</sub>