As earnings dropped Singapore builders face debts mounting

In Bloomberg it was reported that entering 2016, Singapore builders are facing with another wall of debt coming due, falling confidence and declining earnings.

According to Bloomberg-compiled data, a record $9.6 billion of bonds were repaid this year. There are also $6.4 billion of maturities due next year, $2.3 billion in 2017 and $7.4 billion in 2018.

According to stock exchange filings, Ley Choon Group Holdings and Swee Hong are restructuring their debt with lenders; Tat Hong Holdings is asking bondholders to ease financial covenants in its July 2018 notes.

Bloomberg classified 5 residential builders have an average debt-to-equity ratio of 48 times.

Construction emerged as one of the least optimistic industries in a quarterly survey of local firms by Singapore Commercial Credit Bureau, a credit assessment venture between Dun & Bradstreet and the Association of Small and Medium Enterprises.

Five of six industry indicators – net profit, inventory, employment, selling price and new orders – are seen shrinking in the first three months of next year.

The yield on Tat Hong’s 2018 local currency debt had risen to 6% yesterday morning, data compiled by Bloomberg shows, versus 4.5 % when it was sold in July 2013.

According to data published by the Monetary Authority of Singapore, the construction sector accounts for about 5 % of gross domestic product and grew at an annual pace of 1.6 % last quarter, slowing from 3 % in 2014 and 6.3 % in 2013.

 

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