Ships at anchor off Singapore.

Singapore Junk Bonds Slump as Chartering Group Swissco Seeks Restructuring

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October 4, 2016

Ships at anchor off Singapore. File photo: Shutterstock/Rasti Sedlak

By Netty Ismail and David Yong

(Bloomberg) — Singapore’s junk-bond market is suffering its worst rout in at least four years as debt restructurings spread among shipping and oil-and-gas service companies.

High-yield notes in the local currency from borrowers in Singapore slid 1.9 percent last quarter, the most in an IHS Markit Ltd. index going back to 2012. Rig and vessel chartering group Swissco Holdings Ltd. added to the list of firms seeking to reorganize debt Tuesday. It appointed Ernst & Young Solutions LLP to assist in the refinancing and restructuring of S$100 million ($73 million) of notes maturing in 2018, according to an exchange filing.

“The refinancing plan is to allow the company to have an optimized debt structure, with sufficient time to manage its liabilities and growth in the present industry conditions,” Swissco said in the statement. The company is also engaging in discussions with bank lenders and holders of preference shares of two units in the group, it said.

Three bond defaults in the past year and at least seven restructuring proposals have shaken Singapore’s local debt market, prompting the government to tighten oversight of private banks and aid businesses caught up in a global oil and shipping slump. PT Trikomsel Oke, Pacific Andes Resources Development Ltd. and Swiber Holdings Ltd. have missed payments on S$875 million of local notes since November.

Rickmers Maritime, AusGroup Ltd., Marco Polo Marine Ltd. and Perisai Petroleum Teknologi Bhd. are also in various stages of seeking leniency from creditors.

“What they are all doing now is trying to push back the maturity of the bonds, conserve the cash,” said Joel Ng, an analyst in Singapore at KGI Fraser Securities Pte. “Charter rates are still weak. Even if they want to dispose assets to pay back debt I think it remains challenging for now.”

Swissco sold the 5.7 percent notes in October 2014 in a deal managed by Oversea-Chinese Banking Corp., according to Bloomberg data. The securities were last quoted at 47.5 Singapore cents on the dollar, according to prices from DBS Bank Ltd. The company will hold an informal meeting with note holders on Oct. 10, before the next coupon payment on Oct. 16.

–With assistance from Denise Wee and Andrea Tan.

© 2016 Bloomberg L.P

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