Singapore property developers and trusts are facing record debt maturities just as home sales are on their longest losing streak.
They have a combined S$1.8 billion (US$1.3 billion) of local currency bonds due this quarter, S$1.2 billion in the final quarter and another S$3.7 billion in 2017, Bloomberg reports.
Credit Suisse Private Banking said it’s keeping off smaller aller builders because of their “relatively high” leverage.
And JPMorgan Chase & Co. said these companies are “most exposed” to a further property market correction given their weakening finances.
“Many bonds are un-rated and investors aren’t adequately rewarded and have under-priced the risk,” said Ben Sy, head of fixed income, currencies and commodities at the private banking arm of JP Morgan in Hong Kong.
The finances of smaller builders are weakening and leverage is rising in a local market that lacks sufficient scrutiny, he said.
Home values in the city state have dropped 9.4 percent from the peak in 2013 and the declines show no signs of abating.
An index tracking private residential prices fell for the 11th quarter in the three months ended June 30 and the government on Thursday cut its 2016 economic growth forecasts.
The smallest 50 real estate firms and trusts listed on the Singapore Exchange are in a weaker position to repay debt, with operating earnings dropping to 9.2 times interest expenses from 15.8 times five years ago.
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