UK government unveils its Shipbuilding Credit Guarantee Scheme

UK government unveils its Shipbuilding Credit Guarantee Scheme

On Wednesday, 26 July 2023, the UK Department for Business and Trade finally announced its Shipbuilding Credit Guarantee Scheme.

The scheme has been eagerly awaited for many months and while the devil will be in the detail, the announcement itself will be welcomed by the UK yachting industry and particularly yacht owners intending to order newbuildings or undertake refits, retrofits or repairs of existing yachts at UK yards.

The scheme is not as many predicted, in that the scheme is not a straight forward refund guarantee scheme. The scheme is essentially a partial government guarantee in favour of the financier of the buyer/borrower's repayment obligations under a loan. This will surprise most as there had been a general understanding in the industry that the scheme would be a refund guarantee scheme.

Nevertheless, we do not see the scheme itself materially changing a financier's credit or investment committee's decision making approach. Ultimately, the level of risk associated with a particular yard and yacht owner will not change because of the scheme. The scheme however will give financiers an additional level of protection and may well encourage financiers to support projects that hitherto would not proceed.

Download PDF for more information