NNA - Navios Maritime Partners: One Billion Dollars To Enter A Fading Industry

• Navios Maritime Partners has effectively bailed out their near-bankrupt sister company, Navios Maritime Acquisition through an all-equity merger.
• This leaves the almost $1b of net debt they are assuming as the true cost and in return, they receive a business in a notoriously difficult industry.
• Even more concerning is the long-term outlook for the oil tanker industry once peak oil demand is reached, which will see demand for their vessel fade away.
• Even ignoring this fading future, their leverage will surge along with the volatility of their cash flow performance.
• Since this could see Navios Maritime Partners facing solvency issues in the future when their existing cyclical businesses face a downturn, I believe that a bearish rating is appropriate.

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