Default fears are resurfacing in Singapore ahead of a wall of maturing corporate debt, as a US bankruptcy filing by a firm from the city flags lingering pain despite economic recovery.
Pressure to pay down obligations has been unrelenting.
Companies excluding banks must repay S$38 billion (US$27 billion) of local bonds over the next four years.
The maturities peak in 2020, when S$11.2 billion comes due, the most since 2012, according to data compiled by Bloomberg.
For some of Singapore’s small debt-laden companies, a rebound in manufacturing and exports has not been enough to bolster bottom lines sufficiently.
In the latest sign of strains, Ezra Holdings Ltd, which provides engineering services to the offshore oil and gas sector, on Saturday filed for Chapter 11 protection in the US.
The Singaporean government, seeking to make it easier for firms to restructure debt at home, earlier this month voted to enact several changes to its Companies Act that are expected to take effect by Friday next week.
“I see ongoing distress, which could lead to further defaults in the local bond market, in particular in oil and gas and shipping,” said Thomas Dillenseger, Hong Kong-based managing director at restructuring firm Alvarez & Marsal.
Even before Ezra’s Chapter 11 filing, six firms had defaulted on S$1.2 billion of notes since November 2015.
Singapore’s government late last year introduced measures to boost marine and offshore engineering companies’ access to working capital, including providing loans to eligible firms.
“Up to now, local lenders have generally been supportive, although it remains to be seen how long this resolve will last,” said Emmanuel Chua, Singapore-based senior associate at Herbert Smith Freehills.
Ezra’s chief restructuring officer Robin Chiu in court papers said that the company’s recent financial difficulties resulted from the “significant weakness and volatility in the oil price environment,” which has persisted since 2014.
He added that the “prolonged challenging operating environment” in the oil and gas industry made it difficult for Ezra to carry out fundraising.
Ezra bondholders, who have seen prices slump to $0.05 on the US dollar from $0.30 at the start of the year, face uncertainty as they navigate a US bankruptcy process.
“I expect the recovery prospect for Ezra’s bondholders could be pennies on the [US] dollar under the US bankruptcy process,” said Kurt Metzger, a Singapore-based director at GEM Advisory, a debt-restructuring consulting firm.
Ezra referred to the announcement on the firm’s Chapter 11 filing when asked about recovery prospects for bondholders.
Noteholders “may seek to assert rights in the Chapter 11 case,” the announcement said.
The firm intends to convene meetings with the bondholders to update them on its current position and provide further information regarding the filing.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said it plans to ship its new 1 megawatt charging systems for electric trucks and buses in the first half of next year at the earliest. The new charging piles, which deliver up to 1 megawatt of charging power, are designed for heavy-duty electric vehicles, and support a maximum current of 1,500 amperes and output of 1,250 volts, Delta said in a news release. “If everything goes smoothly, we could begin shipping those new charging systems as early as in the first half of next year,” a company official said. The new
RSS