SEA - Star Bulk Carriers: Unprepared For Higher Interest Rates

• Following a largely lackluster decade for the shareholders of Star Bulk Carriers, the booming operating conditions of 2021 saw massive dividends.
• Despite lining shareholder pockets, these dividends came at the expense of tackling leverage, which now sees the company unprepared for higher interest rates at the same time as a recession looms.
• The vast majority of the company's debt carries variable interest rates, which are rising rapidly as central banks tighten monetary policy.
• Even if financial performance were to only soften back to its 2020 levels, which at the time was actually historically solid, it would consume a very large portion of operating cash flow.
• Even worse, the company would have trouble servicing their debt, and thus I believe that maintaining my hold rating is appropriate, with a sell rating possible in the future.

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