Superyacht Financing Boom: Banks Lend Billions as Demand Surges

Strategic Insights -

As the superyacht market booms, with a record number of vessels under construction at the start of this year, banks are increasingly offering low-cost loans to fund the luxury purchases. Billionaires and celebrities like Saudi royals, Russian oligarchs, and celebrities are among those benefiting from these loans, but the growing demand for these high-end vessels also raises concerns about the risk of defaults. With the looming threat of sanctions against Russian allies, one lender, Credit Suisse, has recently securitized $2bn of loans provided to high-net worth clients, backed by their "jets, yachts, real estate and/or other financial assets." The move is seen as a market first, with the bank offloading risk to asset managers in exchange for interest payments.

Key Takeaways:

  • Credit Suisse has securitized $2bn of loans provided to high-net worth clients, backed by their "jets, yachts, real estate and/or other financial assets."
  • The deal is believed to be the first of its kind, with the bank offloading risk to asset managers in exchange for interest payments.
  • The move is seen as a response to the growing demand for superyacht financing and the looming threat of sanctions against Russian allies.
  • Credit Suisse has reported 12 defaults on yacht and aircraft loans in 2017 and 2018 that were "related to US sanctions against Russian oligarchs."
  • The bank has also been battling Saudi Prince Fahad Bin Sultan in the High Court over millions of pounds he borrowed to refinance his superyacht.
  • The market for superyachts continues to grow, with the number of vessels delivered increasing from 148 in 2020 to 157 in 2022.
  • Credit Suisse has over $1bn of yacht-related loans on its books, up from less than $200m in 2014.
  • Coutts, the Queen's bank, offers financing for jets and yachts, with a minimum loan amount of £100,000 at Lombard, the 160-year-old London bank.

Statistics:

  • 148 superyachts delivered in 2020
  • 157 superyachts delivered in 2022
  • 237 superyachts predicted to be delivered this year
  • $2bn of loans securitized by Credit Suisse
  • $1bn of yacht-related loans on Credit Suisse's books
  • 12 defaults on yacht and aircraft loans in 2017 and 2018
  • $40m of Bombardier aircraft sold by billionaire brothers Arkady and Boris Rotenberg
  • $50m of Gulfstream G550 executive jets leased by Industrials tycoon Oleg Deripaska
  • $78m of loans taken out by Saudi Prince Fahad Bin Sultan to refinance his superyacht

Sources:

  • Financial Times
  • The Superyacht Group
  • Wall Street Journal
  • Companies House
  • Credit Suisse
  • Coutts
  • Lombard
  • KPMG