v3.22.2.2

Financial Instruments

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Financial Instruments

12. Financial Instruments

(a) Interest rate risk: The Company is subject to interest rate risk associated with changing interest rates with respect to its variable interest rate term loans and financial liabilities as described in Notes 6 and 7.

(b) Concentration of credit risk: Financial instruments consists principally of cash, trade accounts receivable, long-term receivable and derivatives. The Company places its temporary cash investments, consisting mostly of deposits, primarily with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit evaluations of its customers’ financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate credit risk. The Company limits the exposure of non-performance by counterparties to derivative instruments by diversifying among counterparties with high credit ratings and performing periodic evaluations of the relative credit standing of the counterparties.

(c) Fair value: The carrying amounts reflected in the accompanying interim consolidated balance sheets of cash and cash equivalents, restricted cash, trade receivables, margin deposits, accounts payable and due from/to related parties, approximate their respective fair values due to the short maturity of these instruments. The fair value of long-term bank loans and other financial liabilities with variable interest rates approximates the recorded values, generally due to their variable interest rates. The Company performs relevant enquiries on a periodic basis to assess the recoverability of the long-term receivable and estimates that the amount presented on the accompanying interim consolidated balance sheets approximates the amount that is expected to be received by the Company at the end of the non-cancellable lease period.

The fair values of the interest rate swap agreements and bunker swap agreements discussed in Note 7 above, are determined through Level 2 of the fair value hierarchy as defined in FASB guidance for Fair Value Measurements and are derived principally from or corroborated by observable market data, interest rates, yield curves and other items that allow value to be determined.

The estimated fair values of the Company’s financial instruments, other than derivatives as of June 30, 2022, and December 31, 2021, are as follows:

Financial Instruments - Schedule of Carrying Values and Estimated Fair Values of Financial Instruments (Table)

	Carrying Amount June 30, 2022		Fair Value June 30, 2022		Carrying Amount December 31, 2021		Fair Value December 31, 2021
Financial assets (liabilities)
Cash and cash equivalents	161,148		161,148		117,192		117,192
Restricted cash	10,648		10,648		10,005		10,005
Margin deposits	4,270		4,270		5,849		5,849
Long-term receivable (including short-term portion)	35,930		35,930		35,904		35,904
Financial liability	(3,702)		(3,702)		(4,193)		(4,193)
Obligations under operating leases	(73,511)		(73,511)		(88,573)		(88,573)
Debt and other financial liabilities	(1,485,035)		(1,485,035)		(1,380,648)		(1,380,648)

The Company does not offset fair value amounts recognized for derivatives by the right to reclaim cash collateral or the obligation to return cash collateral. The amount of collateral to be posted is defined in the terms of respective master agreement executed with counterparties or exchanges and is required when agreed upon threshold limits are exceeded. As of June 30, 2022, the Company deposited cash collateral related to its derivative instruments under its collateral security arrangements of $4,270 ($5,849 as of December 31, 2021), which is recorded within margin deposits in the consolidated balance sheets.

Tabular Disclosure of Derivatives Location

Derivatives are recorded in the consolidated balance sheet on a net basis by counterparty when a legal right of set-off exists. The following tables present information with respect to the fair values of derivatives reflected in the consolidated balance sheet on a gross basis by transaction. The tables also present information with respect to gains and losses on derivative positions reflected in the consolidated statements of comprehensive income (loss) or in the consolidated balance sheets, as a component of accumulated other comprehensive income.

Fair Value of Derivative Instruments

Financial Instruments - Schedule of Derivative Instruments - Statements of Financial Position Location (Table)

				Asset Derivatives				Liability Derivatives
				June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivative		Balance Sheet Location		Fair Value		Fair Value		Fair Value		Fair Value
Derivatives designated as hedging instruments
Interest rate swaps		Current portion of financial instruments - Fair value		3,956		7		1,756		8,884
		Financial instruments - Fair value, net of current portion		3,879		1,382		114		8,656
Subtotal				7,835		1,389		1,870		17,540

				Asset Derivatives				Liability Derivatives
				June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Derivative		Balance Sheet Location		Fair Value		Fair Value		Fair Value		Fair Value
Derivatives not designated as hedging instruments
Interest rate swaps		Current portion of financial instruments - Fair value		735		—		—		—
		Financial instruments - Fair value, net of current portion		651		—		—		—
Bunker swaps		Current portion of financial instruments - Fair value		—		1,845		—		—
Bunker swaps		Financial instruments - Fair value, net of current portion		—		144		—		—
		Subtotal		1,386		1,989		—		—
Total derivatives				9,221		3,378		1,870		17,540

Derivatives designated as hedging instruments- Net effect on the consolidated statements of comprehensive income (loss)

Financial Instruments - Schedule of Cash Flow Hedges - Gain (Loss) Recognized In Accumulated Other Comprehensive Loss on Derivative (Effective Portion) (Table)

		Gain (Loss) Recognized in Accumulated OCI on Derivative (Effective Portion)
Derivative		Amount Three months ended June 30,				Amount Six months ended June 30,
		2022		2021		2022		2021
Interest rate swaps		7,376		3,642		26,037		15,611
Total		7,376		3,642		26,037		15,611

Financial Instruments - Schedule of Cash Flow Hedges - Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion) (Table)

				Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
Derivative		Location		Amount Three months ended June 30,				Amount Six months ended June 30,
				2022		2021		2022		2021
Interest rate swaps		Depreciation expense		(49)		(48)		(98)		(96)
Interest rate swaps		Interest and finance costs, net		2,627		2,830		4,959		5,244
Total				2,578		2,782		4,861		5,148

Derivatives not designated as hedging instruments–Net effect on the consolidated statement of comprehensive income (loss)

Financial Instruments - Schedule of Derivatives Not Designated as Hedging Instruments - Net Effect on the Statement Of Comprehensive Income (Table)

				Gain (Loss) Recognized on Derivative
Derivative		Location		Amount Three months ended June 30,				Amount Six months ended June 30,
				2022		2021		2022		2021
Interest rate swaps		Interest and finance costs, net		561		—		561		—
Bunker swaps		Interest and finance costs, net		—		3,695		7,923		7,950
Bunker put options		Interest and finance costs, net		—		(16)		—		(172)
Total				561		3,679		8,484		7,778

The accumulated income from derivatives designated as hedging instruments recognized in accumulated other comprehensive income (loss) as of June 30, 2022 amounted to $4,001, and $17,175 accumulated loss at December 31, 2021.

The following tables summarize the fair values for assets and liabilities measured on a recurring basis as of June 30, 2022, and December 31, 2021, using Level 2 inputs (significant other observable inputs):

Financial Instruments - Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Table) 

Recurring measurements:		June 30, 2022		December 31, 2021
Interest rate swaps		7,351		(16,151)
Bunker swaps		—		1,989
Total		7,351		(14,162)

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- References

No definition available.

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- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258

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