SINGAPORE (S&P Global Ratings) Sept. 17--The mood of the Singapore bond
market has been affected by the financial difficulties of a few companies,
said S&P Global Ratings today in a report, titled "Is Singapore's Previously
High-Octane Bond Market Sputtering?"
Indonesia-based mobile-phone distributor and retailer PT Trikomsel Oke Tbk.
and Hong Kong-based industrial fishing company Pacific Andes Resources
Development Ltd. had defaulted in November 2015 and January 2016,
"Several sectors are vulnerable to rising financial strain," said S&P Global
Ratings analyst Bertrand Jabouley. "The oil services sector remains the most
vulnerable, in our view, as challenging end markets and declining earnings
coincide with high legacy debt levels and growing refinancing requirements."
Given depressed prices for major commodities, agriculture and commodities
companies are next most vulnerable. These companies, especially traders, are
used to having high leverage. Despite a disciplined reduction in debt,
liquidity remains fragile on declining earnings.
"We also said recently that small real estate developers that raised
Singapore-dollar bonds may come under increasing strain over the next 12
months," Mr. Jabouley. "In our view, smaller developers are more vulnerable
than their larger peers to near-term market volatility often due to weak
liquidity positions and sometimes unsustainable leverage levels."
Oil services and real estate have attracted much of media and investors'
attention, but bonds trading in the Singapore market show a degree of
sectorial diversification. As of Sept. 15, 2016, we estimate that listed
entities in Singapore have about Singapore dollars (S$) 60 billion in bonds
outstanding. If we exclude all bonds issued by government-related entities,
the amount is about S$53 billion, said a statement.