Singapore’s wealthiest people have been piling into oilfield services in the past few years, buying up related bonds near the top of the oil market.
Now, they wish they didn’t do that.
Bonds from oilfield services providers are the worst performers among all local notes this year after the fuel slumped more than 30 percent since June, according to Bloomberg.
Two-year securities of Swiber Holdings Ltd., which helps build offshore platforms, are trading about 7 cents below the average price for Singapore debt sold since Dec. 31.
Most of the debentures were taken by private banks on behalf of their affluent clients.
Singapore’s rich have become the driving force in the island’s bond market, snapping up 86 percent of the 20 highest-yielding local notes issued this year as the central bank warned about rising sales to individuals.
Swiber and Ezra Holdings Ltd. are scheduled to repay S$720 million (US$555 million) of notes within the next two years, or three-quarters of the borrowers’ market value, after funding expansion that helped make oil products Singapore’s biggest export industry.
While Singapore doesn’t have natural oil and gas reserves, it’s one of the world’s three biggest oil refining centers and has become Asia’s largest trading hub for the fuel.
The sector accounts for about 5 percent to gross domestic product.
Singapore had the third highest proportion of millionaires last year, behind Qatar and Switzerland, according to a Boston Consulting Group Inc. survey.
The island’s wealthy are pursuing more lucrative returns as the three-month benchmark rate stayed below 0.38 percent for the past two years while fixed deposit accounts for that period yielded an average 0.14 percent, according to the Monetary Authority of Singapore.
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