After Hyflux’s collapse, Singapore debt buyers scrutinising other firms

The collapse of Singapore’s water treatment firm Hyflux has increased investor scrutiny over other debt-laden companies that have sold bonds in the local currency.More defaults could occur as earnings may worsen in a sputtering economy and riskier borrowers that creditors lent to amid low interest rates now struggle, according to S&P Global Ratings. Growth in Singapore’s export-reliant economy has been cooling in the past year and the nation’s central bank said it will slow in 2019, reflecting a weakening in key trading partners.Borrowers excluding banks and other financial firms face S$5.1bn ($3.7bn) of Singapore dollar debt due the rest of this year, before that climbs to a record S$12bn in 2020, according to Bloomberg-compiled data. While rates look set to stay low for now, smaller firms with high leverage could still struggle.“We see pockets of stress in the Singapore dollar bond market,” said Ezien Hoo, credit analyst at Oversea-Chinese Banking Corp. “Smaller companies with high debt loads in industries facing a downturn could face difficulty making repayment.”Firms that have a lot of short-term debt and are in sectors that are vulnerable to business cycles such as commodities and property development could face difficulties, according to Bertrand Jabouley, analyst at S&P Global Ratings.These are some smaller firms with bonds maturing before end next year that bear watching, according to analysts.CWT: S$100mn bond due March 18, 2020. The logistics company, a subsidiary of Hong Kong-listed CWT International, paid its bond due on April 18 but its parent’s problems have cast a shadow.CWT International earlier this month defaulted on a loan and lenders have seized the company’s assets, including its stake in CWT Pte. An auditors’ report contained in CWT International’s 2018 annual results said there could be “material uncertainties” within the firm that “may cast significant doubt on the Group’s ability to continue as a going concern.” Since it was bought in 2017 by CWT International, a unit of Chinese conglomerate HNA Group Co, there’s been less visibility on the issuer’s financials. CWT Pte had S$276mn of cash and a net cash position of S$135mn as of financial year 2018, according to a company overview on its website.CWT International’s total debt was HK$9.7bn ($1.2bn) and cash and equivalents stood at HK$1.7bn as of Dec. 31, according to Bloomberg-compiled data.Vibrant Group: S$66mn bond due on October 3, 2020. The logistics and real estate group’s net income for the three months ended January 31 stood at S$3.9mn, a turnaround from a S$664,000 loss for the same period in 2018.But the group has suffered setbacks and in January, it said a special audit of Blackgold International, a Chinese coal-mining group it acquired in July 2017, has revealed lapses. A fact-finding investigation by EY Advisory showed 2.05bn yuan ($305mn) in overstated sales, the firm also said in January.Cash and equivalents stood at S$59.9mn as of January 31, according to the company’s filing. Its total debt came to S$332.8mn, Bloomberg-compiled data show. The group said in a March filing it’s currently seeking permanent waivers for loan covenant breaches resulting from the “Blackgold event.”In response to questions, Vibrant’s chief financial officer Francis Lee referred Bloomberg to the result of its extraordinary general meeting on April 18, where shareholders “passed a resolution approving the disposal of our property with gross sales proceeds of S$227.5mn.”Oxley Holdings: S$300mn bonds due November 5, 2019; S$150mn notes due May 18, 2020; S$150mn debt due January 31, 2022. This Singapore developer has been cutting leverage but its debt load is still high. Oxley said in a filing last month that it accepted an “expression of interest” from a US-based fund to buy a unit that owns Chevron House at Raffles Place for S$1.025bn. However, the expression of interest isn’t legally binding and subject to due diligence.Its efforts to sell assets have faced some difficulties. The firm terminated a letter of intent to sell its two hotels to Gracious Land for S$950mn in March, prompting a slump in its share price. “We are confident to redeem the bonds come November 2019. Presently, the Company has commenced its deleveraging exercise and we expect to demonstrate the positive results in near term,” an external spokesman for Oxley said.The firm had total debt of S$3.9bn and cash and cash equivalents of S$248.5mn as of Dec. 31, 2018, according to Bloomberg-compiled data.Neptune Orient Lines: S$280mn bonds due September 9, 2020; S$300mn notes due June 22, 2021 Since Neptune Orient Lines was bought by French shipping firm CMA CGM SAin 2016, there has been less visibility on the firm. NOL had a net loss after tax of $134mn for its financial year 2018, while its total debt stood at $2.6bn and total cash at $134mn as of December 31, according to unaudited figures included in a presentation on its website.CMA CGM’s leverage is likely to climb as it raised its ownership in Ceva Logistics AG, according to an OCBC Credit Research in a report dated March 6.