Swiber bond losses show vulnerability of Singapore’s not-so-rich

Pic by World Maritime news

Sixteen Hong Kong banks were forced to repay about $800 million to investors, while 10 financial services institutions in Singapore were banned temporarily from selling structured products.

Regulators had been “too relaxed” about the selling process back in 2008, said David Webb, a Hong Kong-based shareholder activist and deputy chairman of the city’s takeovers panel. “Just because someone is wealthy it doesn’t mean that they are also sophisticated as investors. Regulators need to adopt an approach which can handle both ends of the spectrum of sophistication.”

The growing signs of stress in Singapore’s domestic bond market suggest wealthy investors may face further losses. Last week, Rickmers Maritime and Marco Polo Marine Ltd. said they are having difficulty with bond repayments, as their operations have been hurt by weaker oil prices.

The wealthy are especially vulnerable because of their large exposure to the local bond market. Private-bank clients bought about 44 percent of Singapore-dollar bonds issued in 2014, the most of any investor group, MAS figures show. 

By comparison, private banks and retail investors accounted for just 11 percent of purchases of U.S. dollar-denominated Asian credit in the same year, according to a Deutsche Asset Management presentation.

The revisions to the law proposed by the MAS might have helped another Singaporean bondholder, Sandeep Kapoor, who says he is facing losses after buying S$250,000 of Swiber bonds in 2014. The 50-year-old engineer said he only found out he was an accredited investor last month, some two years after the purchase, via his relationship manager at DBS Group Holdings Ltd.

Under the proposed revisions, he would have been given the chance to opt in to accredited investor status, rather than being automatically assigned to the category because of his wealth.

In an e-mailed reply to questions, DBS said: “Our relationship managers are focused on investor suitability and go through a robust process to ensure that our clients fully understand the product before making their investments.”