Financial bust in O&M sector hitting jobs, weighing on commercial property

As more and more companies in the offshore and marine (O&M) sector struggle to meet their debt obligations, some analysts and industry watchers are beginning to warn of a wider fallout for the local economy. Investors ought to watch for signs of contagion in related services, and even the commercial property market.

Sean Lee, CEO and major shareholder of Marco Polo Marine, which operates a shipyard and charters vessels, says that companies like his are big employers and rely on lots of suppliers. “To operate a shipyard, we need steel plates, paints and other raw materials. For offshore service vessel operators, you need agency services, chandlers, insurance, different types of equipment, spare parts — thousands of items; many of them are perishables,” he says. “Many, many businesses support this sector.”

Among the companies that have defaulted on their Singapore dollar bonds this year are Swiber Holdings, Swissco Holdings and Rickmers Maritime. Meanwhile, Malaysia’s Perisai Petroleum Teknologi, which is an associate company of Ezra Holdings, has also defaulted on its bonds. Ezra itself held a meeting with its bondholders the past week to explain why it plans to seek their permission to loosen its financial commitments.

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