NEW YORK ( TheStreet) -- A host of dry-bulk shipping companies will face a credit crunch unless they can rework their balance sheets, according to one shipping-equities analyst.

With the rates that dry bulkers charge for their services having plunged to levels not seen since the financial crisis, Omar Nokta, an analyst at Dahlman Rose in New York, issued a grim industry research note Monday, suggesting that any light at the end of this tunnel is difficult to see. The dry-bulk market may not fully recover until 2015, Nokta warned.

If this forecast is accurate, the dry-bulk market seems to have entered a full-on depression, which will have serious repercussions on the balance-sheet health of a slew of companies.

As such, Nokta downgraded five stocks in the sector: Genco Shipping & Trading ( GNK), Eagle Bulk Shipping ( EGLE), Navios Martime Partners ( NM), Paragon Shipping ( PRGN) and FreeSeas ( FREE). He cut his rating on each stock to hold from buy.

Right now, if a shipping company hires out a Capesize vessel on the spot market, the fee it collects is less than what it costs to operate the ship. How much less? According to the Baltic Exchange, the London ship broker that tracks the dry-bulk spot market, the average rate for a Capesize ship has fallen to just below $5,000 a day. Shipping pros says that it costs between $7,000 and $10,000 to operate this type of craft, the largest ocean-going dry bulkers in the world, designed to haul iron ore.

Basically, the more debt a dry-bulk shipper has, the more bearish its outlook. Companies that levered up to expand their fleets have covenants in their loan deals. For example, companies need to post certain earnings numbers to stay in the good graces of their creditors.

Most publicly traded shipping companies hire out their fleets under long-term charter contracts with mining companies and others. Many of those deals are close to the end of their terms, Nokta wrote, and when the ships come off charters that had been paying well above the spot rate, earnings will inevitably fall, and covenants will be in danger.

Similarly, because of the collapse in rates, ship values have declined sharply, which could also violate loan covenants. Though Nokta expects companies to be able to renegotiate, "the resulting agreements are likely to restrict growth and limit their ability to adapt to changing market conditions," he wrote.

To give themselves a padding of cash, Nokta expects some dry-bulk companies to raise capital on the equities markets, diluting shareholders. He downgraded the stocks of those companies most likely to do so.

Conversely, Nokta said the shipshape balance sheets of Diana Shipping ( DSX) and Baltic Shipping & Trading ( BALT) will help those companies steer through the rough waters. (Pardon the puns.)

Smaller dry-bulk vessel classes, which carry grain, coal and other minerals, have fared better. That's because ship owners, back during the pre-crisis boom years, ordered fewer of these types of ships. Conversely, they went absolutely crazy ordering Capesizes, enamored with the fast-growing iron-ore trade between the major mining nations (Australia, Brazil) and the steel mills of China.

Everyone agrees that this crushing glut of newly delivered vessels has torpedoed Capesize rates. But the new system under which iron ore is bought and sold has also served to squeeze freight rates, according to Nokta. (This is somewhat controversial; other shipping-industry pros believe the impact has been limited.)

In the short term, matters haven't been helped by the catastrophic floods in Queensland, Australia, where more coking coal is mined than anywhere else in the world. The deluge has basically shut down the supply chain there, increasing the number of unemployed vessels on the global market.

Shipping observers believe that booking activity will bounce with the end of the Chinese New Year -- China is the world's largest importer of iron ore and coal, thanks to its gigantic steel industry. But according to some observers, iron ore stockpiles are large enough at China's ports to limit any short-term rise in Capesize demand. Long-term, it's all about the "orderbook," or the number of new ships coming into service.

"We believe current rates in general are unsustainably low and look for a modest rebound by late February, following the conclusion to Chinese New Year holidays and the subsiding of the floods in Queensland," Nokta wrote. "However based on vessel supply and iron ore/coal pricing dynamics, we are not expecting a material improvement."

Nokta said he believes Capesize rates can average about $20,000 a day in 2011, which still won't give much support to shipping companies in danger of breeching their loan covenants.

Other dry-bulk observers are even more bearish about the Capesize market. "To me, a lot of analysts are surprisingly optimistic that rates are going to recover," and average $20,000 a day or more during 2011, said Jeffery Landsberg, who follows the dry-bulk shipping market at his shop, Commodore Research. Rates are more likely to stay below $10,000 a day, he said.

Dry bulk stocks were mostly in the red Monday, with Eagle Bulk leading the way to the downside, giving up more than 4%. Eagle investors were spooked last month when one of the company's major chartering partners, Korea Line Corp., entered receivership. But the government of South Korea looks as though it may bail the company out, diminishing Eagle's counterparty risk.

Elsewhere, Navios Maritime Partners lost 3.5%, Genco fell 2% and Paragon lost about 1.6%.

A few shippers were in positive territory, including Diana, which inched higher by 0.25%, and DryShips ( DRYS), which gained 0.8%. FreeSeas, a micro-cap name whose shares are lightly traded, rose 3%.

-- Written by Scott Eden in New York

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