Singapore bond market frenzy distorts credit costs, S&P says

SINGAPORE (June 7): Corporate bond offerings by some of Singapore’s biggest companies are drawing such strong demand from investors that they are artificially lowering borrowing costs for weaker borrowers, according to S&P Global Ratings.

Recent offerings from issuers such as state investment company Temasek Holdings Pte, port operator PSA Corp and electricity distributor Singapore Power Ltd were “well over-subscribed” amid heightened threat of non-payments by riskier borrowers across Southeast Asia, analysts Bertrand Jabouley and Xavier Jean wrote in an e-mail interview. Banks have also been supporting some companies in the troubled oil services industry, easing default pressure, it said.

Singapore’s bond market suffered its first defaults since 2009 when PT Trikomsel Oke missed payments on two bonds with $215 million of face value in late 2015. Fishery group Pacific Andes Resources Development Ltd reneged on a $200 million note in January, while recent debt failures across the region have included PT Berau Coal Energy and 1Malaysia Development Bhd.

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