We expect corporate earnings reports in the coming months will support further upward revisions to estimates and target prices.
What lessons are there for the investment community? Sat, Jul 14, - 5: A climbing default toll continues to expose the vulnerabilities of the underdeveloped Singdollar corporate bond market. Above, the massive Lewek Constellation, Ezra's sub-sea construction vessel that was sold during the downturn Bond holders met with management at Ezra's office on Oct 25,and agreed to waive their rights before it filed for bankruptcy.
In June, precision- engineering firm CW Advanced Technologies became the latest issuer to seek a court order to stave off creditors, after its plan to re-tap the bond market to redeem its first series of notes got quashed by poor market sentiment.
Since Novemberat least 13 issuers have defaulted on a total of 23 Singdollar bonds by missing coupon payments, failing to repay note holders at maturity, filing for judicial management, filing for bankruptcy protection and in one case breaching a financial covenant. The number excludes companies like Ezion, which strictly speaking has not legally defaulted on any notes since it got note holders to agree to swap their debt for equity through an out-of-court process before its next coupon was due.
Among the defaulted, Marco Polo Marine has returned to solvency after note holders agreed to swap their debt for equity.
But 10 other issuers remain stuck in various stages of restructuring while two have been liquidated. Unlike Singapore's stock market, the Singdollar bond market is still in its infancy.
That bull market offered companies a convenient way to diversify their capital structure by reaching out to affluent investors who didn't ask too many questions.
Better still, perps could be accounted as equity rather than debt in a company's books. Now, one sinking ship after another, that value proposition has been called into question. A debt capital markets lawyer here told The Business Times: Issuers want to issue bonds quickly but don't want to spend on fees, so that comes at the expense of credit ratings, and the due diligence process.
The Singapore market has developed to be cheap, good and fast I understand cheapness, but sometimes the cheapness makes you shake your head. With the higher risks come higher yields - all well and good in a risk-on environment. In contrast to the US, where lower-rated high-yield debt is targeted at hedge funds, private banking clients have been the driving force behind the Singdollar high-yield market.
Last year, corporate perpetuals accounted for 16 per cent of aggregate issuance volumes.
No one really talked about defaults or restructuring risks. So, during the period of ultra-low interest rates that followed, folks here happily snapped up the debt of Singapore's more high-risk companies, which for a time yielded some juicy semi-annual payouts.
Now, the credit cycle has peaked, turning certain high-yield instruments into junk. The right to payment While note holders have priority over share investors in a liquidation event, they are often just as powerless as share investors if issuers or the secured lenders who control them choose to bulldoze their way through a restructuring, as those holding the debt of Trikomsel and Rickmers Maritime Trust discovered during the earlier parts of the default parade in By convention, bond investors don't have influence over how a company is governed or conducts its business, with their right to demand immediate payment kicking in only in the event of a default.
This is because they are lenders, not owners of the company, unlike shareholders. When creditors of all classes clash over the fate of a delinquent issuer, the only thing that underpins note holders' bargaining power is the threat to demand immediate payment.
Even then, they can only take action through a bonds trustee that has limited incentive to enforce their rights vigorously, until it deems that it is sufficiently indemnified and funded.All new businesses need capital, and there are two ways to get it.
A business can issue corporate bonds or obtain loans from a bank or other lender, or it can issue shares of stock to investors. Bond and Stocks Financing Essay Sample. Financing thru Stocks Stocks are the owned capital of a business and that it is considered a permanent investment.
The first-stage regression is based on all takeovers of SDC Platinum that satisfy the initial criteria mentioned. The dependent variable in this first-stage regression is a dummy with one if the source of funds is disclosed for the takeover.
The bond market doesn't get nearly as much attention among most investors as the stock market, as most people are lured by the opportunity to see their investments skyrocket in value over the long.
In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the.
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