AnalystMichael Webber delivered the sobering reminder to investors at a time when thepeer group is trading up almost 50% this year.

Ina note entitled “Dry Bulk: Hold Your Horses” Webber says Excel Maritime,Genco, Eagle Bulk and DryShips, some of the best performing stocks in thesector this year, still face further restructuring challenges.

“We actually think this trade may bepunctuated by a Chapter 11 filing as opposed to a return to broad-basedprofitability, and while this idea that multiple players in the dry bulk spacewon’t survive is not new, what is new is that the market seems to have forgottenit,” the analyst said.

Webber notesExcel, Eagle and Genco are trading up around 74% this year, “despitesignificant, and in some cases immediate”, balance sheet or bankruptcy risk.

Excel Maritimehas been working with Miller Buckfire on a restructuring having secured somedebt relief until the end of 2013 and raised some cash from the market.

Webber says theprocess is difficult to read but sees “few, if any” positive outcomes forcommon equity holders. 

Genco is likelyto need some debt relief by the end of next year and given its huge spotexposure may break some covenants when they are reactivated at the beginning of2014, the analyst notes.

A further roundof restructuring talks for the owner could begin as early as the middle of thisyear, he suggests.

Webber says EagleBulk is in better shape than Genco and Excel given its longer debt runway.

"That said, while that runway is a modestplus for EGLE on a relative basis, we think the dry bulk recession couldpersist well into 2015, with that race against EGLE’s grace period remainingthe biggest long-term variable for the stock,” he added.

DryShips isbattling a $500m capex bill for its dry-cargo newbuildings and is becomingincreasingly exposed to the depressed dry market as long-term contracts end.

Webber believesthe potential sale of shares in drilling arm Ocean Rig leaves the companybetter placed to ride out the storm. But he notes the undervalued stock pricefor the offshore company means the action would still negative for DryShips’investors.