Analysts are predicting potential defaults on bond issuances by property developers.
Singapore saw five companies, including oil services firms Swiber Holdings and Swissco Holdings, default on nearly S$1 billion of bonds this year, revealed a Bloomberg report.
Restructuring specialist KPMG expects the defaults to widen to include the city-state’s property developers, after housing prices fell the most in over seven years during the third quarter of 2016.
The commodities-related defaults in Singapore may prove to be the canary in the coal mine.
“Singapore is a bellwether for the larger Asean and Asian region,” said Andy Ferris, Singapore-based partner at Hogan Lovells Lee & Lee. “Some of the fundamental problems those industries face won’t go away. Many of the companies in the commodities sector have high levels of debt and depressed revenues.”
Data compiled by Bloomberg shows that the Asia-Pacific region’s energy-related firms, including coal miners and oil services companies, face US$12 billion of dollar bonds maturing in 2017, while real estate companies must repay US$8.7 billion.
Oil producer MIE Holding’s dollar notes maturing 2018 traded at 83.3 cents on the dollar on Monday (26 December), while commodities trader Noble Group’s dollar bonds due 2020 traded at 84.2 cents.
Graham Martin, Head of Restructuring at KPMG Singapore, expects more defaults among shipping and oil services firms throughout the Asian region, including countries such as Thailand, Malaysia and Indonesia.
“We think Indonesia will be one of the top markets for restructuring work in 2017,” said Martin.