Why bonds could be the next ticking time bomb for developers

SINGAPORE (Oct 3): Over $2 billion worth of bonds will be maturing in 4Q16, and another $9 billion in 2017.

Of that figure, local property developers and real estate investment trusts (REITs) account for 75% of the bonds maturing in 4Q16 and 40% of those maturing in 2017, according to a report by S&P Global Ratings on Sept 7.

The issue, however, is not with the REITs. Chan Kah Ling, the lead analyst of the S&P report, reckons that REIT debt is manageable. “REITs, with their stable and recurring cash flows, lower leverage, and large proportion of unencumbered assets, have more financial flexibility than developers,” she notes in the report.

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