Presenting Singapore’s Potentially Over Leveraged Corp Bonds
I did some elementary analysis.
Dragged out the companies that are highly geared. For that I used companies whose Total Assets are more than 4 times Total Equity.
And included their debt servicing costs ratio using their Earnings before Tax and Interest divided by their Interest Costs.
It is interesting to note that 5 in the list have SGD bond issues.
This information could be outdated because it is based on last year’s numbers and some companies have gone on to borrow alot more this year. Names such as Guocoland whose EBIT/Total Int Expense is 0.5 times which means that 50% of their profits go towards servicing their debt.
Presenting the list (missed out the column headings – Column 2 is EBIT/Int Exp and Column 3 is Total Assets/Total Equity).
Swiber does not look that bad except that their subsidiary Vallianz happens to be on the list as well which means double the pain for borrowings if interest rates go up.
Olam is a natural inclusion but Aspial, Hyflux and Oxley ? Oxley borrowing 9 times their equity ? Bad news if rates rise.
I am not recommending anything in this article. The information is unverified and subject to errors and should not be relied upon to make any investment decisions.