Thank you for standing by, ladies and gentlemen, and welcome to the Safe Bulkers conference call to discuss the first quarter 2022 financial results. Today we have with us from Safe Bulkers, Chairman and Chief Executive Officer, Mr. Polys Hajioannou, President, Dr. Loukas Barmparis, and Chief Financial Officer, Mr. Konstantinos Adamopoulos. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time if you wish to ask a question, please press star one on your telephone keypad and wait for the message advising your line is open. Following this conference call, if you need any further information on the conference call or the presentation, please contact Capital Link at 212-661-7566. I must advise you that this conference is being recorded today.
Before we begin, please note that this presentation contains forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended concerning future events, the company's growth strategy and measures to implement such strategy, including expected vessel acquisitions and entering into further time charters. Words such as expects, intends, plans, believes, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risk and are based upon a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the company.
Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, changes in the demand for dry bulk vessels, competitive factors in the market in which the company operates, risks associated with operations outside the U.S., and other factors listed from time to time in the company's filings with the Securities and Exchange Commission. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with respect thereto, or any change in events, conditions, or circumstances on which any statement is based. I pass the floor to Dr. Barmparis. Please go ahead, sir.
Good morning. I'm Loukas Barmparis, President of Safe Bulkers. Welcome to our conference call and webcast to discuss the financial results for the first quarter of 2022. Let's start our presentation in slide 3. Certain general comments. Our 2022 first quarter profitability exceeded first quarter of 2021 profitability by $15 million, reaching net revenues of $77.7 million and a net income of $36.4 million. We delevered our balance sheet year-over-year by more than $200 million, reducing our debt to comparable levels to our fleet scrap value. We issued and listed €100 million five-year unsecured non-amortizing bond with a fixed coupon of 295, and maintain significant liquidity and capital resources of $298 million. We have redeemed in April 2022 more than a quarter of our 8% preferred shares, improving our weighted average cost of capital.
Furthermore, we have a significant cash flow visibility with over $400 million of chartered contracts. At the same time, we continue to focus on fleet renewal and expansion with eight Phase 3 newbuilds on order and 42 vessels on the water with an average fleet age of 10.4 years. in May, we took delivery of our first Phase 3 Kamsarmax class MV vessels and have also expanded our Capesize fleet to seven vessels. Our financial strength enables us to declare a dividend of $0.05 per common share, noting that at the same time, we are renewing our fleet with secondhand and Phase 3 newbuilds ahead of the competition. Allow me now to guide you through the company's key investment highlights as presented in slides four and five.
Safe Bulkers is a top 10 pure dry bulk vessel owner in Panamax segment with a heritage of 60 years plus and a track record experience and hands-on management led by Polys V. Hajioannou. With a strong company balance sheet fundamentals, ample liquidity, leverage at comparable levels to fleet scrap value, and secured cash flows from reliable counterparties, we have secured with eight Phase 3, Tier III newbuilds our fleet expansion and renewal ahead of peer competition and ahead of the expected impact of the environmental regulations of 2023 onwards. We took delivery of our first Phase 3 newbuild a few days ago. We have $463 million of secured contract revenues, 25% of our fleet is contracted for more than one year.
Our fleet average charter period duration is about 1.2 years, and we have an additional yearly revenue capacity of about $20 million plus from our 17 scrubber-fitted vessels due to the inherited fuel price differential. Our 42-vessel fleet is 85% comprised of Japanese vessels with superior modifications and commercial and operational upgrades which call a substantial premium both in chartering and resale value. The order book remains at 20 years low, and market fundamentals are positive for the remaining of 2022. We believe that the company is well-positioned for the long run with an environmental based advantage. Moving to slide five, we highlight certain key figures of Safe Bulkers. All numbers presented are as of quarter end, and more specifically, our liquidity and capital resources are $359 million, consisting of $166 million in cash and $193 million in undrawn available revolving reducing credit facilities and secure commitments.
Furthermore, we have contracted revenue of $426 million net of commissions from our non-cancellable spot and period time charter contracts. Our CapEx were $243 million in relation to these nine Phase 3 newbuilds, the first of which we took delivery few days ago, and we had $409 million of outstanding consolidated debt, including our €100 million unsecured bond issued in February 2022. Our fleet scrap value of $395 million is presented in the last column on the right and is calculated on the base of our fleet aggregate lightweight tons and scrap rate of $662 per lightweight ton, again, as of quarter end. On top of our liquidity and capital resources, we had as of quarter end, an additional borrowing capacity in relation to further encumbered vessels and selling newbuilds upon their delivery. Moving on to slide seven in the dry bulk market.
We present the development of the Thomson Reuters/CoreCommodity CRB Index, which currently stands at a five-year high with a further upside potential. The index reflects various commodities future prices. For example, energy, agricultural, basic metals, and industrial materials, which represent a limited indicator for shipping. As a result of the ongoing Russian-Ukraine war, we have witnessed a rapid surge in prices during 2022. The updated forecast of IMF immediately following the Russian-Ukraine war sets the global GDP expected growth at 3.6% for 2022, which is lower from 4.4% previously, and at 3.6% for 2023, which is again lower from 3.8% previously. In addition, the global projections for inflation stand at 5.7% in advanced economies and 8.7% in emerging markets and developing economies. The Chinese GDP growth of the first quarter of 2022 was 4.8%, despite the new domestic COVID-19 lockdowns and the Russia-Ukraine war.
The forecasted global dry bulk ton-mile demand is expected to increase by 2.2% in 2022, supported by the industrial materials like iron ore, coal, and agriculture, while the expected dry bulk net fleet growth stands at 2.1% for 2022, which means that a squeeze in the supply of vessels may well be a realistic scenario. Let's go to slide number 8 to have a quick look on present charter market conditions. As shown on the top graph, the Capesize market for the year to date continues to be healthy. Capesize lately have been volatile, driven by the commodities dynamics which we have analyzed. The FFA curve presented in red color is about $30,000-$35,000 for 2022. Similarly, for Panamax in the lower part of the graph, the FFA curve is about $25,000-$30,000 for 2022.
The prevailing commodities market, coupled with strong supply fundamentals, are likely to support the freight market throughout 2022. In slide 9, we present our scheduled order book deliveries. In this positive charter market environment, we have one more delivery in 2022 following the delivery of our first Capesize newbuild vessel a few days ago, five in 2023 and two in the first quarter of 2022. In the same slide in the bottom graph, we also present a record low order book for the forward years for Capesize-Panamax vessels. The supply fundamentals are strong as we witness a historically low order book and a shortage in seakeper capacity, which is mainly gathered by other sectors' orders, mainly containerships and tankers. Turning to slide number 10, we focus on intrinsic value of our company due to appreciation of our investments, which is about $150 million.
Before this business cycle, as part of our fleet renewal strategy, we have invested in nine newbuilds of the newest design complying with the IMO regulation for CO2 and NOx emissions. Further, we have acquired three Panamax and three Capesize secondhand vessels from big Japanese ship owners. The average acquisition price of our nine newbuilds was about $32.5 million, as compared with their current average market value of about $42.5 million. For the six secondhand vessels, the average price was $25.9 million as compared with their current average market value of $31.9 million. This timely fleet of investments has appreciated by about $125 million. Furthermore, the company has previously invested in scrubber technology for 17 of its vessels.
The surge in fuel prices the last months, more evident in today's market, has pushed a very low sulfur fuel oil versus high sulfur fuel oil differential at high levels, which is translated to increased revenues for the scrubber-fitted vessels. Presently, the Hi-5 in Singapore stands at about $280 per ton, and according to the future market, the balance for 2023 stands at about $190 per ton. The scrubber-fitted Post-Panamax takes about 7,500 metric tons per year, pushing the implied scrubber gain potential to about $24 million per annum in aggregate for our company's 17 scrubber-fitted vessels. As a result, this intrinsic value of the company is calculated at $150 million approximately. Let's summarize company's and market takeaways in slide 11.
Safe Bulkers has a strong upside with new build program and second-hand acquisition, ample liquidity and capital resources, which favors opportunistically the expansion and strong balance sheet with leverage comparable to fleet scrap value, future visibility of contracted cash flows. We reward our shareholders with a sustainable dividend policy coupled with our fleet renewal strategy. At the same time, the market has strong fundamentals with limited dry bulk fleet expansion for the next couple of years and new and forthcoming environmental legislation that set new standards for shipping. We believe that Safe Bulkers will be in the forefront of environmental-based competitiveness with new builds ahead of competition, upgrades in each existing fleet, use of biofuels, and research for alternative fuels. Now, let me pass the floor to our CFO, Konstantinos Adamopoulos, for our financial overview.
Thank you, Loukas, and good morning to everyone. Let me start with our quarterly financial highlights in slide 13. During the first quarter of 2022, we operated in an improved charter market environment compared to the same period of 2021, with lower interest expense and increased revenues, which also include earnings from scrubber-fitted vessels. Our quarterly net revenues stood at $77.7 million versus $62.5 million last year. Net revenues increased by 24% compared to the same period in 2021, mainly due to the increased TCE rate as a result of the improved market, which was also assisted by the additional revenues earned by our scrubber-fitted vessels. We had a TCE of $21,352 compared to a TCE of $15,567 during the same period in 2021. The net income for the first quarter of 2022 reached $36.4 million compared to $21.3 million during the same period of 2021.
Our daily OpEx stood at $5,722 compared to $4,702 last year, and our daily OpEx excluding dry docking and pre-delivery expenses stood at $4,923 versus $4,350 last year. Vessel operating expenses increased, mainly affected by increased dry docking expenses, which include low friction paints, application for upgrading the vessel's environmental performance, increased provision of technical services, and increased crew repatriation expenses due to the COVID-19 pandemic. The aggregate figure for our OpEx and G&A for the first quarter of 2022 was $7,242. This includes all dry docking and pre-delivery expenses and all director and officers' compensation. Our adjusted EBITDA for the first quarter of 2022 increased to $46.9 million compared to $34.6 million for the same period of 2021.
Our adjusted EPS for the first quarter of 2022 was $0.24, calculated on a weighted average number of 121.6 million shares, compared to $0.14 during the same period in 2021, calculated on a weighted average number of 103.4 million shares. Let's conclude our presentation on slide 14 with our quarterly operational highlights for the first quarter of 2022 compared to the same period of 2021. We were able to enter into several favorable time charters, substantially deleverage our fleet, and improve our liquidity. As a result of our performance, the company's board of directors decided to declare a $0.05 dividend per common share. In February 2022, we successfully issued a five-year secured non-amortizing bond in the amount of €100 million, guaranteed by Safe Bulkers, which pays a coupon of 2.95% on a semi-annual basis.
We would like to emphasize that the company is maintaining a healthy cash position of around $141.5 million as of May 22, and an additional $156.6 million in RCF and secure commitments. The combined liquidity of little less than $300 million will provide us with significant firepower. Furthermore, we have contracted revenue from our non-cancellable spot and period time charter contracts of around $463 million, no commissions, and additional earning capacity in relation to seven new builds upon their delivery and six existing debt-free vessels. Our press release presents in more detail our financial and operational results, and now we are ready to take your questions.
Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Our first question comes from Chris Wetherbee with Citigroup. You may proceed.
Hey, thanks, guys. This is Eli Winski on for Chris. Maybe we could talk about the updated outlook on the bulk market, given some of the geopolitical issues going on here. Just a couple of things. Obviously, you guys spoke a little bit about the Russia-Ukraine side, but maybe you can talk about how your business specifically is changing to account for the changes in the market right now and what you think. Obviously, understanding you don't have a crystal ball, but what the market could look like towards the end of the year and maybe into the following year.
Yes. Good morning, first of all. The updated market conditions is that we have entered the second quarter with a healthier market than we had in the first quarter, which underperformed because after Chinese New Year, we had the break of the war in February between Russia and Ukraine, which had a negative effect. Also, the prolonged COVID lockdowns in Shanghai area in China. This has muted the market for much of Q1. The recovery started in May, a bit later than other years, and the market is improving from that point on. The Ukraine war will change the dynamics of the market in that we would lose the exports of grains from Ukraine, which are around 50 million a year, at least for the foreseeable future. Then we will have a problem with sanctions cargo from Russia that people cannot load on their ships.
The joint effect of losing these two countries will be around 100 million tons. This, in part, can be replaced by other countries. But without that, the whole amount will be replaced by the rest of the world. Of course, the ton-mile effect will be covering part of this loss because whatever is substitute from other countries will come from longer distances. We are seeing cargoes now from Australia being carried to Persian Gulf or to Egypt or to places far away that they used to be supplied from Black Sea. Initially there is a benefit on ton-miles, but later on I think will be shortage especially on grains. To the contrary, we see increased movement of coal because of the conflict. All the environmental issues will be postponed and are postponing.
Countries, especially in Europe, have to rely more on coal supplies for the foreseeable future. The sanctions, in a way, is delaying the decarbonization of the market, indirectly, of course. There is a benefit from extra coal demand on countries like Europe. Overall, the picture is unclear how it will be developed, but there are plus and minus from this equation. If we add on this COVID fear in China, with the recent lockdown of about seven weeks there, we believe that Chinese government will follow stimulus packages for their economy in the months to come to recover this loss of productivity, loss of production slowdown they had because of COVID. This should be positive for iron ore trades and trading to China.
Got it. Just a quick clarification. You said out of Ukraine it is a loss of 50 million tons a year. Is that what you were saying, 50 million tons?
40 to 50 million tons. It's the amount that every year we were expecting to see from Ukrainian exports.
A total net effect of 100 million tons, given the sanctions in Russia.
Yes. Together with Russia, it's around 100 million, yes. This, of course, in other countries, will cover a good part of it, but not the whole lot. So ton-miles will increase because other countries are further away from the receiving countries, like North Africa, Egypt, Middle East. So in part will be covered by the ton-miles, the loss of cargo, but the quantities won't be there. And this, I think we will see these shortages in the second half of the year.
Got it. On a time charter basis, I understand that you guys were up year-over-year, but it's down sequentially. Now, obviously, you have the typical seasonality in that, but it's lower than what typical seasonality has historically been. Was that just because of some of the headwinds that hit Q1 specifically, or is there another reason there that we should be thinking about?
Q1 always is low. The average we achieved in Q1 is still satisfactory, over $21,000 across the board. You have to remember that also we have a number of dry docks during this quarter. I am reasonably optimistic for the next few quarters, but there will be a lot of headwinds from various sources. At the moment, we may have a very strong market in one basin and very low market in different basins. We wait to see the new trends and the new routes that will be created out of so long this war lasts.
Got it. One more from me. What is your contracting strategy here for the rest of the year and into 2023? I think you guys are 78% for the full year. What does that look like to increase that number throughout the rest of this year?
For the rest of 2022, we prefer to work mainly in the stock market. If we can find charters that they could take us well into 2023, we will go for one-year charters taking us past the first quarter of Q1 of 2023. On the bigger ships, the Capesize bulk carriers at the right time in the market, we prefer to try and fix for two or three-year charters. It is a lot easier to find two or three-year charter on the Capesizes than on the Kamsarmax because the forward curve is always undervalued on Kamsarmax, whilst sometimes it is fairer on the bigger ships. Where possible, the bigger ships we will be going for two or three-year charters, and the smaller ones up to one-year charters.
Got it. Thank you all.
Thank you.
Thank you. Our next question comes from Ben Nolan with Stifel. You may proceed.
Yeah, thanks. As you were talking about or as you discussed your outlook for the dry bulk market and just how you see things playing out, I am curious how you think about maybe where you envision the company in the next three years. You have been pretty active ordering new vessels and upgrading the fleet, and you now have a dividend. Based on sort of how you see the dry bulk market playing out, how would the company maybe look differently three years from now if things were to go the way that you would hope they would?
Yes. Look, I believe that a modern shipping company has to be in the game active around all cycles and have competitive vessels, modern vessels, and be able to compete in the market. For example, we recently took delivery of our first Phase 3 Tier III new building last month, which we fixed a good $7,000 or $8,000 above the spot market at the time of modern Kamsarmax. So the ship achieved $35,900 for a two-laden legs trip of around duration of four months. While at the time, the modern Kamsarmax were earning $28,000 a day. Reason being, that is a very economic ship, burning a very low amount of fuel per day. Now, with these ships that we are getting delivery, we started taking delivery, and in the next 18 months, we will have nine new ships in the fleet.
We are reducing the average age of our fleet by 2 years. So in 2 years' time, the average age of the fleet will still be 10 years old. At the same time, we will try and buy a few younger ships, modern secondhand ships, not older than 10 years old, 8, 10 years old. Recently, we bought three Capesize bulk carriers. We are working on something more. We believe that these are ships that could still be fixed in the next 18 months at good charter rates for 2, 3-year charters with very minimal downside risk on the residual value. So we will combine the order book with some selective acquisition, especially on bigger ships. I believe that the engines of the future is not yet decided and the type of fuel that we will burn in the next decade is not decided.
We cannot predict now whether this is methanol or LNG or anything else. So for the time being, we go for the best ships we can get from reliable shipyards offering us low consumption. These vessels are burning 6, 7 tons of fuel per day less than comparable modern ships at a time when fuel cost is approaching $1,000 a ton. This is the price, $900 to $1,000 is the price of VLSFO today in the Far East. So by keeping renewing our fleet and new ships joining the company, we shall remain a modern company in the next 3 years, 3, 4 years.
By that time, I believe, we will decide where will be wise to invest the liquidity we will generate from the revenues of the company to which type of engine, type of vessel we will be able to invest this money, what new type of engine and type of fuel we will decide to invest. At the moment, we don't have a clear picture. We have an idea, but all these things are changing every other month. To be honest with you, we want to have all the options open before we commit ourselves into the long-term planning.
We will stay with whatever best design we have in front of us now, and we will wait to see what happens on the technology front, on the environmental front, and try with in between investments in environmental features like paints, like maybe rotors, maybe ducts, maybe other things that technology is offering to us to try and become even more environmental friendly company.
Okay. But you do still expect growth to take advantage of the market and to be able to continue to grow the company compared to maybe using this as an opportunity to really increase dividends substantially or something like that.
The dividend to increase is the easy part. This you can always do it. The difficult part is to have the dividend sustained in the long run and to grow it in the long run. Not to go up and down and give it out in one go when you don't know how much money you will spend on the new technologies and how much investment you would do. So we have selected the growth plan, the renewal plan, the deliverance path. And we reinstated last quarter a dividend, which is not, of course, the largest in the market because we combine it with other actions. But we want to believe that what we are doing here is creating value for our shareholders in the long run. So we are focusing on what creates value for shareholders in the long run.
Yeah. That's right. All right. And then lastly for me, I know you guys have historically been primarily a Panamax class, New Panamax, Kamsarmax, Post-Panamax, sort of mid-sized, focused. Although recently you've been adding some to the Capesize business. Is that an area where you see a level of focus such that you can get some of the, I don't know, critical mass, be able to grow that side of the business? Maybe not to as much as you are in the other area, but maybe weighted a little bit more equally?
Yes. No, look, since all our new ships are Kamsarmax and Post-Panamax, it's logical to try and do on the second hand something that is on a different sector to spread out the risk and have more diversification. And we selected the bigger ships because we believe that there are opportunities from time to time. There are ups and downs in the market, which is affecting prices as well. So you can have a low 2 or 3 months. You may get a cheap deal from a seller on the Capesize bulk carriers, and then the market may recover after 6 months. And I believe that with the COVID restrictions of China, that there will be enough stimulus or action taken by Chinese government to increase production in China and do investments that help their economy.
For this reason, we say we don't need to risk more in investing same sector. The order book of Capesize is very low. We have seen that scrap iron is appreciating, and these are ships of 26,000, 27,000 steel, which its price only by scrap value has been increased by EUR 4 million or EUR 5 million in the last 12 months. And it gives the company also an extra flavor of that market, when all our investments are on the medium sector of Kamsarmax to Post-Panamax. That's why the recent acquisitions have been on Capesize bulk carriers. We don't intend to go into smaller ships despite the lucrative flavors because I think already the prices in that sector are sometimes more expensive than even a Capesize.
All right. Very clear. Appreciate the color. Thank you.
Thank you.
Thank you. Our next question comes from Chris Robertson with Jefferies. You may proceed.
Good morning, and thanks for taking my questions.
Yes.
You talked a lot about the younger end of the fleet here with the new buildings, as well as some of the latest secondhand acquisitions. Could you talk a little bit about the older end of the fleet in terms of sales and divestment strategy here, or any incremental upgrades necessary ahead of the new IMO regulations this year that would require some dry docking or OpEx higher in the remaining quarters?
As far as we are concerned, our older part of the fleet, which is we have six vessels built between 2004 and 2006, are all Japanese shipyards and they are Tier II equivalent, so they are pretty much there for the next few years. Of course, we are not very much interested to trade these ships until they are scrapped. Our history has shown that in the past, we used to be selling ships at around 10-year mark, and these days around 16, 17 years mark. I believe overall, the aging of the fleet and the average type of older vessels around are ships that they cannot comply with the regulations after 2024. These ships, they need to make big investments, big environmental investments and big improvement to stay in business.
I think all this will be very positive for the market, not because the ships will be delayed in making their pace, but because many charterers will not prefer to fix these vessels because of the penalties they will be facing in various ports in the world with all the emission charges and all these things that will hit the industry in the next few years. I think all this provides a far better, let's say, horizon for the much younger ships and especially those that consume very low quantity of fuel oil. As always, have seen a certain part of the fleet will need to slow down to achieve emissions that they are at acceptable levels.
I think overall, whilst our older ships are all built in Japan, we believe in general the market will have a problem in that respect and maybe Loukas can give more details.
You may consider that as we have ordered nine ships already, which are Phase 3, and we have from a previous ordering, from the previous cycle about I think 11 eco ships. Altogether, this new set, the relatively younger segment in our fleet is about 50% of our vessels. The other, let's say 50% mostly includes Japanese vessels which relatively to Chinese of that era are substantially more efficient and can easily comply. Always what we should expect is that the problem relies on heavier vessels, larger vessels, that as Paul said just before, will have to face the competition. In terms of our strategy, we continue to upgrade our fleet continuously during dry dockings, doing what is necessary and monitoring also very carefully the environmental performance of our fleet, to achieve better environmental ratings as we go ahead.
I think this is a very successful and low cost project because our fleet is, as we said before, it's Japanese and relatively more efficient. I think that at the end result, we end up with a very good performance the next few years. Of course, any discussion of a new fuel is a question of, let's say the next generation, after I think 2025 or 2027 probably because we don't have even today any fuel that is suitable or has been proven that is suitable for such extensive and global fueling of the fleet.
There's certainly a lot of technological uncertainty here. Thanks for the thorough explanation on that. My second question is related to the Series C preferreds that you redeemed. It looks like around 35% is still outstanding. I know you had mentioned fleet renewal, some deleveraging focus and things like that, but how are you thinking about the remaining Series C preferreds?
Look, it's not our priority after such a big payment we have in the first quarter. I think it's not our first priority to redeem more preferred shares. It's a good class of shares to have on the balance sheet. We've done our part. If the strong market continues for another couple of years, we may consider again that at the appropriate time. But as you know, we have the expansion as well. We have the deleverage also in our plans and we have dividends also in our plans. We've done the preferred part for this year, I think and we'll see what happens later on and how strong the market will be in 2023 and 2024 if there is excessive liquidity to redeem some more of those shares.
Overall, the company is looking very closely at the leverage, which is the debt part, not the equity part. If you consider that right now, we have reached the level where the leverage is comparable to our debt, to our scrap value. This is one of the most important characteristics that we would like to maintain in the future. We don't want to see our leverage increasing substantially more compared to the scrap value of the vessel. This is the level that we feel quite comfortable. At the same time, to the extent that we are able to do additional period time charter contracts, that gives us the visibility of our cash flows. As we said, this exceeds $400 million at this stage.
I think this makes a very good company for anyone who would like to invest because we invest in a low-leverage company with substantial contracted revenue, with a dividend, and of course, which is sometimes we tend to ignore with the new vessels, which are coming much earlier compared to 2025. The Phase 3 vessels are coming to our books until 2024. Also, we try at any given time to utilize the reserves of the company as best as we can for the benefit of the shareholders. In the first quarter of this year, we had also the opportunity to draw a bond in the Greek market with a coupon of less than 3%, which is a very attractive coupon. With this, we use part of it to redeem a preferred of 8%.
Whenever we have certain opportunities and we can save money and create value for shareholders, we will be investing in things like that. If you say that we paid around $40 million and the saving is 5%, it's around $2 million a year. It's only the differential of the two interest rates of preferred and bond we issued in February.
Got it. Yeah, appreciate the time. Thank you very much.
Thank you.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. Our next question comes from Magnus Fyhr with H.C. Wainwright. You may proceed.
Thank you. My questions are related to how your chartering strategy and financing strategy may have changed with recent events in Ukraine and inflationary pressures building. I think you answered the first question earlier, but just on the financing side, you did the EUR 100 million euro bond. I am just curious, with interest rates moving up, are you taking any proactive approach to fix some of that debt? Most of your debt is fixed or a significant portion is fixed. So just curious if you have changed anything, with inflationary pressures building.
Yes. Look, as we reduce the debt, we have less worries about inflation that is hitting us. When we raised the debt, and we fixed our coupon at $295 with the bond, we decided to cash the benefits we had on the swaps at that time, because at the same time, it's one of our priorities to deleverage the fleet. Already, the loans we have are down to around 30% of our assets, and we intend to reduce it even more. There will be a point that we will be taking delivery of new buildings without adding finance on some of them. We will be using liquidity to pay the yards. We don't feel we need to hedge because already now, the interest rates have risen to a level that you see a flat curve.
You see a curve across two, three, five years that is flat. I don't think that this will keep going up. It may be in the next 12 months, we see some increase and some pressure, but thereafter, I think there's no one in this war to keep going forever. The rest of the world, as well as Russia, will realize that we all pay the penalty for this war and for these sanctions that we have now, apart from the huge humanitarian loss and the people who are losing their lives in Ukraine. The sooner things stabilize and the sooner things are back to normality and maybe sanctions are normalized, the better will be for all of us, I believe. I don't see interest rates going to 5% or 6% in the next one or two years.
I see them going, of course, to 3%, but okay, if you are delivering at the same time, the risk is minimal on the effect to the company. With the reduced needs for financing and with the issuance of this bond, I think we are well covered to fight that storm, if there is a storm in the end with interest rates. Is worrying us the effect of raising interest rates to world economies and to a recession and hitting a recession in the Western economies than the actual interest cost of our activities. We are more worried about the net effect to world economies out of this interest rates than to our company.
All right. Thank you, Paul. Just one last. You have one of the lowest operating costs in the industry. Is there anything you can do there to maintain that with inflationary pressures building as well, or is that kind of a small cost of your overall operations?
It's not a small cost, and to be honest with you, I'm not very happy at all with the numbers because we are shipowners, we do this job, me, I do it the last 35 years and the company the last 60 years. I don't remember a phase that we had so many things hitting us at the same time.
Whether that it's not only inflation as you said, but it's mostly the rise of energy, the cost of fuel, the cost of producing something, coupled with the side effects of the war that is increasing the cost of transporting spare parts from Europe to the Far East and especially, on ships we have some heavy lift spare parts that we usually carry for dry dockings and we have been using for it mainly heavy lift aircraft liners, like most of them were belonging to Russian Air Fleet, these big airlines. This has doubled or trebled the cost of transportation of spare parts. At the same time, we have been hit by extended COVID-19 in China with all the restriction of making crew changes in Chinese ports or in other ports, which is hitting us also from that effect.
The increased dry docking cost, the cost of environmental improvements on low friction paints we are using on all our ships, which it has a huge effect on the OpEx, but on the other hand we have a huge benefit from increased revenues because we reduce consumption by using low friction paints, which means that the ships will be saving fuel and we will get this as extra revenue on time charter rates of the ships. All these things as you pay now to receive later, so it appears on the OpEx now because we're painting even older ships with this type of paints, which is costing a lot to apply them, and also the cost of paint itself. The benefit will be shown in the following quarters.
I know it's looking a little bit rough at the moment, but I can assure you that we monitor every detail of it and this extra investment adds to the cost. Indeed, I expect our OpEx to come down in the next quarter, but not by a huge margin because all these investments will continue to be taking place.
We basically expense certain investments, certain upgrades, environmental upgrades are being expensed not appreciated. This has increased the operating expenses.
All right, great. Thanks for that additional color.
Thank you.
Thank you. I am not showing any further questions at this time. I would now like to turn the call back over to management for any further remarks.
Yes, we would like to thank you for attending this conference call and we will be happy to discuss again with you in our next quarter financial results. Thank you very much and have a nice day.