Shipping finance is in the midst of a sea change.

Historically dominated by small family-owned companies, the shipping industry has long relied on commercial bank debt, particularly asset-based loans on individual vessels, for funding.

In recent years, American financiers have bombarded shippers with new options-everything from junk bonds to initial public offerings to buy/lease-back arrangements on vessels.

Shippers have particularly taken to junk bonds, often using them to replace traditional bank loans, made mostly by old maritime banks in cities such as Copenhagen or Athens.

Some in the industry are concerned about this new infusion of cash.

"Historically, too much capital has been a problem in the shipping business," said Petter Andrup, a partner with Oslo-based R.S. Platou Shipbrokers. Mr. Andrup said too many vessels on the water could lower fees for shippers.

"If it is being used mostly for consolidation, that might be a good thing," Mr. Andrup said, "but if it is all being used for tonnage, that might be a bad thing."

Most shipping companies with access to the high-yield market have used junk bonds equally to refinance bank debt and to buy vessels. They are about 50% more likely to buy a secondhand vessel as a newly built one, according to a recent report by Chase Securities shipping analyst Kirk Ludtke.

The $2.6 billion worth of new high-yield issues for shipping lines this year is more than double what was issued all of last year. Most of the shipping companies issuing junk this year have been rated B by Standard & Poor's and B3 by Moody's Investors Service, with some ratings dipping even lower.

Some shipping investment bankers see junk bonds as one step toward taking these companies public.

"High-yield bonds are like equity with training wheels," said Jeffrey Pribor, head of transportation investment banking at ING Barings Furman Selz.

The sluggish IPO market makes this a bad time to take shipping companies public, Mr. Pribor said last week in New York at a conference sponsored by the Institute for International Research, Marine Money International, and Chase Manhattan Corp.

"Shipping has been in a transaction-driven environment with high-yield," he told attendees. "Now is the time to stress relationships with financial institutions while preparing to go public."

Though junk bonds are a good tool for financing fleet expansion, Mr. Pribor said, equity could help fuel industry consolidation.

He said U.S. institutional investors would be crucial to an equity offering and ideally should account for 60% to 80% of investors.

One Norwegian shipping line executive, whose company trades on the Oslo stock exchange-where shipping companies make up about 20% of the valuation- advocated dual listing in Oslo and the United States for shippers.

Herbjorn Hansson, president and chief executive of Ugland Nordic Shipping, said his company is priced at about four times cash flow on the Oslo market. If Ugland was also listed on one of the U.S. stock exchanges, it would trade at closer to six times cash flow, he said.

"You have better pricing in the United States because of the size of your market," Mr. Hansson said. "I also think Oslo investment bankers could be more aggressive, like American investment bankers."

Mr. Hansson said he would not abandon the Oslo stock exchange, because Norwegian financiers are steeped in the culture of shipping. Though Norway has about 0.1% of the world's population, Norwegian lines do about 10% of the world's shipping.

Oddleif Hatlem, a senior vice president of the Oslo stock exchange, said foreigners provide much of the liquidity for shipping equities. About one- third of maritime shares on the Oslo stock exchange are held by people living outside Norway, mostly Americans and Britons, Mr. Hatlem said.

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