In the wake of a sell-off that followed a deeper than expected third-quarter loss David Epstein of Connecticut-based broker-dealer CRT Capital said the US-listed tanker and bulker operator’s 5% senior unsecured convertible due December 2014 still looks “very compelling”.

In a note to clients Epstein described the results as “disappointing” but said the recent panic centred on $420m worth of unfunded newbuilding commitments and an earnings presentation in which DryShips said it “has no access to Ocean Rig’s capital” might be overblown.

While Economou threatened to walk away from construction contracts if attempts to secure breathing room fall short, Epstein, like many Wall Street analysts, believes the statements were more of a negotiating tactic and not meant to rattle the debt, convertible or stock markets.

And though the Athens-based shipowner said “Ocean Rig is completely ring fenced from DryShips” the researcher told clients that he doesn’t think either of the comments should be taken as an indication that the group plans to “cut DryShips loose in any way”.

“The part about Ocean Rig being ring-fenced is nothing new-its already known- it just probably spooked people to see it written that way,” Epstein continued. “DryShips could get some money from Ocean Rig in the future, however, when Ocean Rig starts paying dividends...”

“DryShips really just doesn’t want to sell Ocean Rig stock in the mid-teens- they think it’s much too cheap- and they want to find other ways to muddle through their situation. If and when Ocean Rig shares rebound, we could see the company selling off some of its stake.”

Epstein claims the convertible’s maturity “is not a pressing situation” and is confident the operator is unlikely to rock the boat when it comes to newbuilding contracts or the payment of bank debt as this could curb the Economou group’s overall ability access to capital in the future.

“We also think that DryShips has enough levers to pull such that it could even just make the full cash payment if necessary,” he continued in reference to next year’s $253m capex bill, $173m worth of debt amortization and general concerns about liquidity in 2013.

“With $132m of unrestricted cash outside of Ocean Rig plus $187m [in earmarks] we do not believe the company would need to sell more than a fraction of its existing ships in order to help meet any cash shortfall."

While Epstein acknowledged the ships are encumbered he is confident the banks would approve asset sales if proceeds were set aside for amortization payments and noted it wouldn’t need to trim much of its $1.3bn stake in Ocean Rig if dividends failed to materialise and was struggling to plug a gap.

Assuming each of the spinoff's rigs are worth around $600m and an 18.5% discount to CRT's valuation of DryShips' fleet of tankers and bulkers, he says the owner could reduce its 65.2% stake to 38.5% and still boast enough asset value to cover the convertible through 100% of par.

Shares of DryShips gained traction in the last day of trading before the Thanksgiving holiday in the US, jumping 1.10% to $1.66 while its convertible hovered around $71.00. Meanwhile, Nasdaq-listed shares of its offshore affiliate rose 0.72% before topping out at around $15.36.

As we have reported, after securing $108m in financing to partially fund the delivery of three tankers, analysts say eight bulkers and a pair of crude carrier newbuildings remain unfunded and many fear this will continue to act as a headwind going forward.

Michael Webber of Wells Fargo expects DryShips to seek additional delays, discounts and/or seller financing to ease the burden. He noted that newbuilding values have slid by as much as 20% in the years following the reactivation of an accelerated fleet expansion programme.