Company: CTRM
Filing Date: 2025-05-14
Form Type: 20-F
Source: 0001140361-25-018945
Chunk: 13

Company: Castor Maritime Inc.
Filing Date: 2025-05-14
Form: 20-F
Item: Item 11
Chunk 13
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ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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We are exposed to various market risks, including foreign currency fluctuations, changes in interest rates, equity price risk and credit risk. Our activities expose us primarily to the financial risks of changes in interest rates and foreign currency exchange rates as described below.
 
Interest Rate Risk
 
The international shipping industry is capital intensive, requiring significant amounts of investment provided in the form of long-term debt. A significant portion of our debt contains floating interest rates that fluctuate with changes in the financial markets and in particular changes in SOFR, which is the relevant reference rate under our credit facilities. Increasing interest rates could increase our interest expense and adversely impact our future results of operations. As of December 31, 2024, our net effective exposure to floating interest rate fluctuations on our outstanding debt was $103.6 million. Our interest expense is affected by changes in the general level of interest rates, particularly SOFR. As an indication of the extent of our sensitivity to interest rate changes, an increase in either Euribor and SOFR of 1% would have decreased our net income in the years ended December 31, 2023 and 2024 by $1.1 million and $0.5 million, respectively, based upon our floating interest-bearing average debt levels during 2023 and 2024. We expect our sensitivity to interest rate changes to increase in the future as we enter into additional debt agreements in connection with vessel acquisitions.
Foreign Currency Exchange Rate Risk
 
We generate all of our vessels revenue in U.S. dollars and 71% of our revenue from services in U.S. dollars. A minority of our vessels’ operating expenses (approximately 1.7% for the year ended December 31, 2024) and of our general and administrative expenses (approximately 10.8%) are in currencies other than the U.S. dollar, primarily the Euro. For accounting purposes, expenses incurred in other currencies are converted into U.S. dollars at the exchange rate prevailing on the date of each transaction. For our foreign subsidiaries with non-USD functional currencies (such as MPC Capital) income and expense items are translated at the average exchange rates for the reporting period. We do not consider the risk from exchange rate fluctuations to be material for our results of operations because as of December 31, 2024, these non-US dollar expenses represented 4.2% of our total revenues. However, the portion