Since January 1965, in cases where the Export Credits Guarantee Department was prepared to give an unconditional guarantee, overseas shipowners ordering ships from yards in the United Kingdom have been able to obtain credit for 80% of the contract price, repayable over eight years from delivery and in some cases longer, at a fixed interest rate of 5½% per annum. This rate, when introduced in 1962, applied only to the first five years or so of a financial guarantee contract, but in 1965 the London clearing banks and the Scottish banks agreed to cover the whole period of such contracts on this basis. By contrast, British shipowners ordering ships from yards in the United Kingdom have had to raise finance at substantially higher rates; the alternative was to buy abroad, where they could often obtain credit terms roughly similar to those available to foreign buyers in the United Kingdom. To meet this situation, negotiations with the banks were opened last year on the possibility of extending the 5½% fixed rate, under government guarantee, to domestic purchases from U.K. yards.
Published on
01 June 1967
Finance for shipbuilding