by Denise Wee & Abhishek Vishno

Singapore’s bond market has seen unprecedented defaults, and a slump in oil prices along with a weak property market are threatening to increase non-payments this year.

The following is a list of four firms that have Singapore dollar-denominated bonds maturing by the end of next year, and that Bloomberg’s default-risk monitor suggests have the highest odds of failing to repay obligations in the next 12 months among the nation’s companies that aren’t restructuring their debt.

To be sure, all four companies are meeting their obligations and their default odds are all below 10%, according to the Bloomberg-compiled gauge, which is based on metrics such as share performance, liabilities and cashflow. They have default odds of 1.49% to 7.27%, the model shows. Under Bloomberg’s default risk scale, a score from 0.52% to 10% indicates a company’s debt would be high-yield, with distressed debt having a reading above 10%.

One company that’s already defaulted this year is offshore oil services firm Ezra Holdings Ltd, which filed for US bankruptcy protection on March 18. The company’s probability of non-payment in a year’s time shot up to 12% in March when its shares were suspended, from 2.5% on July 13.

Ezra’s troubles highlight how falling crude prices and a cutback in spending on exploration have battered offshore oil and gas (O&G) services companies, helping push up defaults in the local market to S$1.35 billion (RM4.17 billion) since November 2015.

Singapore’s property sector is also looking vulnerable, with the nation’s home prices falling for a record 14th quarter in the first three months of the year, despite a recent uptick in sales. And the nation’s borrowers will face financial pressure in the next few years with S$36.4 billion of Singapore dollar bonds coming due by 2020.

“We do expect there will be further defaults,” said Andy Ferris, Singapore-based partner at Hogan Lovells Lee & Lee. “I think industries that will be under intense pressure are O&G services firms, shipping and commodities-related companies.” Ferris added that amid weakened property prices, “it’s possible we could see one or two defaults in the property sector”.

The list, based on data compiled by Bloomberg, excludes convertible bonds and perpetual securities and companies that have said they are restructuring their debt. It also leaves out companies that aren’t listed. Cashflow and debt figures below have been adjusted to ensure comparability across firms.

1. TA Corp Ltd

Debt coming due: S$40 million of 5.5% bonds maturing March 29, 2018. Trailing 12-month adjusted operating cashflow: S$11.4 million. Adjusted total debt: S$369.6 million. Market capitalisation: S$132.6 million as of June 6. Bloomberg default risk model one-year default probability: 7.27%, from 3.4% a year earlier.

The Singapore-based real-estate developer posted a net loss of S$6.7 million in 2016, its second straight year of losses. Sales fell 30% to S$194.1 million, due to lower revenue in its construction, property development and investment divisions.

Neo Tiam Boon, CEO of Singapore-listed property and construction company, said the firm has met semiannual interest payments for its bond since its issue date.

“We are committed and have the financial resources to meet all our interest and principal payments for our Series 2 bond issue barring any unforeseen circumstances,” said Neo, referring to the securities due in 2018. TA has sufficient resources in place to meet all its debt obligations, he said.

He said that while the Singapore residential and construction markets have been in a “prolonged downturn due to the sluggish eco-nomy,” the firm is confident that it will eventually turn for the better. Neo said TA has recently closed an issue of warrants to existing shareholders to expand the company’s equity.

We do expect there will be further defaults as industries that will be under intense pressure are O&G services firms, shipping and commodities-related companies, says Ferris of hogan Lovells Lee & Lee

The bonds due 2018 were at 95.5 cents on the Singapore dollar on June 7, according to Bloomberg-compiled prices.

2. Pacific Radiance Ltd

Debt coming due: S$100 million of 4.3% bonds maturing Aug 29, 2018. Trailing 12-month adjusted operating cashflow: Negative US$14.9 million (RM64.07 million). Adjusted total debt: US$557 million. Market capitalisation: S$79.9 million as of June 6. Bloomberg default risk model one-year default probability: 4.16%, from 3.01% a year earlier.

The offshore vessels and support services firm posted a net loss of US$14.7 million in the first-quarter (1Q), widening from a net loss of US$6.8 million for the same period in 2016. Sales fell by 24% to US$14 million.

“Pacific Radiance will continue to work closely with lenders to ensure sustainability of its business at an appropriate debt level and are evaluating options on hand,” said Carol Chong, a representative at Oaktree Advisers, the external media company for Pacific Radiance.

In a May 12 exchange filing, Pacific Radiance said that improving the group’s liquidity position remains a “key focus”. It added that a financial assistance plan announced by the government last year provides assurance that funding options are available to offshore marine companies affected by the downturn.

The notes due 2018 were at 20 cents on the Singapore dollar on June 7, according to DBS Group Holdings Ltd prices. Pacific Radiance’s stock fell 4.5% to an all-time low of S$0.107 last Wednesday at 2:15pm Singapore time.

3. Falcon Energy Group Ltd

Debt coming due: S$50 million of 5.5% bonds maturing Sept 19, 2017. Trailing 12-month adjusted operating cashflow: US$18.19 million. Adjusted total debt: US$229.7 million. Market capitalisation: S$55.7 million as of June 6. Bloomberg default risk model one-year default probability: 2.52%, from 0.42% a year earlier.

The marine and O&G services provider posted a net loss of US$10.2 million for 3Q ended March 31, compared to a net income of US$557,000 a year earlier. Sales slumped 74% due to declines in the oilfield and drilling services division and the marine division.

The firm has appointed KPMG Services Pte Ltd as an advisor to conduct an independent business review and will hold an informal meeting of noteholders on June 14.

An external spokesman for Falcon Energy declined to comment for the story. In a May 12 exchange filing, the company said that the business environment “continues to be challenging due to intensified competition and clients’ bargaining power”. Margins for vessel charter rates and fees for oilfield services are “razorthin”, the company said. Its key focus will be on cash preservation, strict financial control and having a strong balance sheet, Falcon Energy said in the filing.

The bonds due 2017 were at 70 cents on the Singapore dollar on June 7, according to DBS prices. Falcon Energy’s stock fell by 1.5% to an all-time low of S$0.068 last Wednesday at 3:49pm Singapore time.

4. Tee Land Ltd

Debt coming due: S$30 million of 6.5% bonds maturing Oct 27, 2017. Trailing 12-month adjusted operating cashflow: Negative S$15.1 million. Adjusted total debt: S$214.9 million. Market capitalisation: S$89.4 million as of June 6. Bloomberg default risk model one-year default probability: 1.49%, from 0.96% a year earlier.

Singapore’s property sector is also looking vulnerable, with the nation’s home prices falling for a record 14th quarter in the first 3 months of 2017

The residential and commercial property developer’s net income slumped 95% from a year earlier to S$66,000 for its 3Q ended Feb 28.

“The bond maturity is something we are always mindful of and we believe we will be able to meet this obligation,” said David Ng, financial controller of Tee Land, in an email on May 8. “We have resources, internally and externally, in place to meet this debt obligation.”

In a March 27 exchange filing, Tee Land said that the Singapore government’s cooling measures continue to curb demand, and it expects the local property market to remain “generally unchanged”. The firm also has a presence in Thailand, Malaysia, Australia and New Zealand, according to its website.

The company’s notes due 2017 were at 99.5 cents on the Singapore dollar on June 7, according to Bloomberg-compiled prices. — Bloomberg