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Swiber defaults on bond payment again

 

 

Beleaguered oil field services firm Swiber Holdings has defaulted on a coupon payment due yesterday for its 450 million yuan (S$92.3 million) fixed-rate notes - the second bond payment it has defaulted on since its judicial management application in July.

 

According to the judicial managers' report earlier this month, Swiber has US$258.6 million (S$354 million) outstanding as of July 31 on three notes under a $1 billion multi-currency medium-term programme.

 

One of these three is the 450 million yuan note, on which Swiber had a 17.44 million yuan coupon payment due yesterday, according to court papers.

.....

 

Swiber roiled the local bond market last month after it defaulted on a $4.88 million coupon payment that came due on Aug 2 on a $150 million sukuk note. This was part of a US$500 million multi-currency Islamic Trust certificate issuance programme.

.....

 

http://www.straitstimes.com/business/companies-markets/swiber-defaults-on-bond-payment-again

 

 

 

To them, default is no issue, cos they have nothing to pay anyway ... just default lor ...

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Can bully the weak and poor people because they cannot fight back.

 

How to bully the rich, powerful and well connected? They will fight back

 

and have even more resources.

 

Old saying owe the bank a million and cannot pay, you have a problem.

 

Owe the bank a billion and cannot pay, the bank has a problem.

 

:D....

 

 

 ...in this small country...peasants are being bullied all the time..but if you are AMDK..they are abit worry...sigh..

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Swiber defaults on bond payment again

 

 

Beleaguered oil field services firm Swiber Holdings has defaulted on a coupon payment due yesterday for its 450 million yuan (S$92.3 million) fixed-rate notes - the second bond payment it has defaulted on since its judicial management application in July.

 

According to the judicial managers' report earlier this month, Swiber has US$258.6 million (S$354 million) outstanding as of July 31 on three notes under a $1 billion multi-currency medium-term programme.

 

One of these three is the 450 million yuan note, on which Swiber had a 17.44 million yuan coupon payment due yesterday, according to court papers.

.....

 

Swiber roiled the local bond market last month after it defaulted on a $4.88 million coupon payment that came due on Aug 2 on a $150 million sukuk note. This was part of a US$500 million multi-currency Islamic Trust certificate issuance programme.

.....

 

http://www.straitstimes.com/business/companies-markets/swiber-defaults-on-bond-payment-again

 

 

It makes sense.

 

$4.88 million cannot pay.

 

S$92.3 million definitely cannot pay.

 

:D 

 

 

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these people are rich...please don't say they are not really rich

 

i think many mcfers are accredited investors too...jin rich

 

:D

 

 

How Singapore’s Not-Really-Rich Have Been Burned by Swiber Bonds
September 20, 2016 — 5:00 AM SGTUpdated on  September 20, 2016 — 11:25 AM SGT
 
 
  • Parliament to debate changes to accredited-investor regime
  • Singapore energy services companies hurt by oil price plunge

When Elaine Tham signed an “accredited investor” form with her bank in Singapore two years ago, she took a fateful step toward losing all the money she had set aside for her children’s education.

Based on her financial profile and investment priorities -- her need for S$150,000 ($110,000) to pay university fees -- a local branch of HSBC Holdings Plc had initially categorized her as a “medium risk” investor. But because the value of her property and car entitled her to “accredited” status, a category reserved for wealthy investors, Tham says she was persuaded to take a riskier path. She agreed to invest S$250,000 in the bonds of a small Singapore energy-services company, Swiber Holdings Ltd., which said in August that it won’t be able to repay its bondholders.

Tham is one of many Singaporeans who lost money by investing in Swiber, which sold an unusually high proportion of its bonds to the wealthy clients of banks in Singapore. Amid signs last week that more local energy-services companies are being dragged down by the prolonged slump in global oil prices, some are urging quick action to plug loopholes in Singapore’s investor-protection rules.

 

“It’s time for Singapore’s regulators to rethink how they define the accredited-investor regime,” said Christopher Chen, an assistant law professor at Singapore Management University. “Here, if someone happens to own a landed property, likely that person will become an accredited investor. If investors are really rich, it’s not a problem. But some people are semi-rich, or look rich on paper.”

488x-1.png

A Singapore-based spokesman for HSBC declined to comment on Tham’s case, referring inquiries about the sales practices of the bank’s relationship managers to its 2013 annual report. In that report, HSBC said it stopped linking wealth-management relationship managers’ incentives to sales volumes for the U.K. and France that year, and would make that effective in most markets by 2014.

Singapore law allows banks to automatically classify individual investors as “accredited” if they have at least S$2 million of assets or earned at least S$300,000 in the previous 12 months. By entering the category, the wealthy are given a greater range of investment choices but lose some of the key protections offered to ordinary investors -- such as restrictions on selling them certain riskier products. Swiber bonds were only available to accredited investors or those investing a minimum of S$250,000, according to Robson Lee, a Singapore-based partner at the U.S. law firm Gibson, Dunn & Crutcher LLP.

Property Riches

As property prices surged over the past decade, many middle-class Singaporeans entered the accredited investor category due to the high value of their homes. A mass-market 1,000 square-foot suburban apartment was worth S$1.26 million on average in the second quarter, Savills Plc data show, while a same-sized luxury apartment in the center of town would be worth S$2.34 million. About 20 percent of Singaporean households live in private housing, government data show.

 

“They are wealthy by technical definition, but in reality they may not have enough disposable assets to withstand such losses,” said Lee at Gibson, Dunn & Crutcher. “There are many Swiber bond investors who are left high and dry as they were persuaded by their bankers to buy such high-yield products with money they can ill afford to lose.”

More than 80 percent of some Swiber bond issues were sold to clients of Singapore private banks, which cater for the wealthiest investors. Swiber is currently under interim judicial management and missed a payment on a bond coupon in August, which triggered cross defaults on all its issues.

Legal Changes

Asked about the implications of the Swiber default for investor protection, the Monetary Authority of Singapore said it’s proposing revisions to the law which will prevent banks from assigning accredited investor status to those whose wealth is mostly in property. The changes will also require that individuals be allowed to decide if they wish to "opt in" to accredited status and thereby forgo the protections afforded to ordinary investors. The MAS plans to introduce the revisions to Parliament by the fourth quarter, it said Sept. 2 in an e-mailed response to questions from Bloomberg News.

Allowing wealthy investors to opt in to the accredited investor regime will bring Singapore up to the investor protection standards of Hong Kong and the European Union, the MAS said in its proposed amendments to the law.

Regardless of investors’ status, “private banks are expected to adopt fair business practices and act in the best interests of their clients,” the MAS said.

Hong Kong introduced safeguards earlier this year for wealthier people in the “individual professional investor” category, requiring banks to ensure that products they sell are appropriate for a client’s risk profile and financial situation.

Lehman Losses

Regulators in both Singapore and Hong Kong have sought to boost investor protection after mis-selling scandals at the time of the 2008 global financial crisis caused investors millions of dollars of losses. The most notorious was the sale of structured products linked to Lehman Brothers Holdings Inc. -- investments that soured rapidly following the U.S. bank’s collapse in September 2008. 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.

488x-1.png

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." The bank’s accredited investor clients "are kept informed of their AI status at various stages, including at the time of account opening, account review, and after every trade conducted," DBS added.

 

Kapoor said he would choose not to be an accredited investor, given the chance. “Who would understand the full consequence of being an accredited investor? It can be a grey area."

 

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these people are rich...please don't say they are not really rich

 

i think many mcfers are accredited investors too...jin rich

 

:D

 

 

How Singapore’s Not-Really-Rich Have Been Burned by Swiber Bonds
September 20, 2016 — 5:00 AM SGTUpdated on  September 20, 2016 — 11:25 AM SGT
 
 
 
 
  • Parliament to debate changes to accredited-investor regime
  • Singapore energy services companies hurt by oil price plunge

When Elaine Tham signed an “accredited investor” form with her bank in Singapore two years ago, she took a fateful step toward losing all the money she had set aside for her children’s education.

Based on her financial profile and investment priorities -- her need for S$150,000 ($110,000) to pay university fees -- a local branch of HSBC Holdings Plc had initially categorized her as a “medium risk” investor. But because the value of her property and car entitled her to “accredited” status, a category reserved for wealthy investors, Tham says she was persuaded to take a riskier path. She agreed to invest S$250,000 in the bonds of a small Singapore energy-services company, Swiber Holdings Ltd., which said in August that it won’t be able to repay its bondholders.

Tham is one of many Singaporeans who lost money by investing in Swiber, which sold an unusually high proportion of its bonds to the wealthy clients of banks in Singapore. Amid signs last week that more local energy-services companies are being dragged down by the prolonged slump in global oil prices, some are urging quick action to plug loopholes in Singapore’s investor-protection rules.

 

“It’s time for Singapore’s regulators to rethink how they define the accredited-investor regime,” said Christopher Chen, an assistant law professor at Singapore Management University. “Here, if someone happens to own a landed property, likely that person will become an accredited investor. If investors are really rich, it’s not a problem. But some people are semi-rich, or look rich on paper.”

488x-1.png

A Singapore-based spokesman for HSBC declined to comment on Tham’s case, referring inquiries about the sales practices of the bank’s relationship managers to its 2013 annual report. In that report, HSBC said it stopped linking wealth-management relationship managers’ incentives to sales volumes for the U.K. and France that year, and would make that effective in most markets by 2014.

Singapore law allows banks to automatically classify individual investors as “accredited” if they have at least S$2 million of assets or earned at least S$300,000 in the previous 12 months. By entering the category, the wealthy are given a greater range of investment choices but lose some of the key protections offered to ordinary investors -- such as restrictions on selling them certain riskier products. Swiber bonds were only available to accredited investors or those investing a minimum of S$250,000, according to Robson Lee, a Singapore-based partner at the U.S. law firm Gibson, Dunn & Crutcher LLP.

Property Riches

As property prices surged over the past decade, many middle-class Singaporeans entered the accredited investor category due to the high value of their homes. A mass-market 1,000 square-foot suburban apartment was worth S$1.26 million on average in the second quarter, Savills Plc data show, while a same-sized luxury apartment in the center of town would be worth S$2.34 million. About 20 percent of Singaporean households live in private housing, government data show.

 

“They are wealthy by technical definition, but in reality they may not have enough disposable assets to withstand such losses,” said Lee at Gibson, Dunn & Crutcher. “There are many Swiber bond investors who are left high and dry as they were persuaded by their bankers to buy such high-yield products with money they can ill afford to lose.”

More than 80 percent of some Swiber bond issues were sold to clients of Singapore private banks, which cater for the wealthiest investors. Swiber is currently under interim judicial management and missed a payment on a bond coupon in August, which triggered cross defaults on all its issues.

Legal Changes

Asked about the implications of the Swiber default for investor protection, the Monetary Authority of Singapore said it’s proposing revisions to the law which will prevent banks from assigning accredited investor status to those whose wealth is mostly in property. The changes will also require that individuals be allowed to decide if they wish to "opt in" to accredited status and thereby forgo the protections afforded to ordinary investors. The MAS plans to introduce the revisions to Parliament by the fourth quarter, it said Sept. 2 in an e-mailed response to questions from Bloomberg News.

Allowing wealthy investors to opt in to the accredited investor regime will bring Singapore up to the investor protection standards of Hong Kong and the European Union, the MAS said in its proposed amendments to the law.

Regardless of investors’ status, “private banks are expected to adopt fair business practices and act in the best interests of their clients,” the MAS said.

Hong Kong introduced safeguards earlier this year for wealthier people in the “individual professional investor” category, requiring banks to ensure that products they sell are appropriate for a client’s risk profile and financial situation.

Lehman Losses

Regulators in both Singapore and Hong Kong have sought to boost investor protection after mis-selling scandals at the time of the 2008 global financial crisis caused investors millions of dollars of losses. The most notorious was the sale of structured products linked to Lehman Brothers Holdings Inc. -- investments that soured rapidly following the U.S. bank’s collapse in September 2008. 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.

488x-1.png

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." The bank’s accredited investor clients "are kept informed of their AI status at various stages, including at the time of account opening, account review, and after every trade conducted," DBS added.

 

Kapoor said he would choose not to be an accredited investor, given the chance. “Who would understand the full consequence of being an accredited investor? It can be a grey area."

 

 

 

They were rich ... but they didn't do any research ...

That's the difference between these newly rich and the real rich ....

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these people are rich...please don't say they are not really rich

 

i think many mcfers are accredited investors too...jin rich

 

:D

 

 

How Singapore’s Not-Really-Rich Have Been Burned by Swiber Bonds
September 20, 2016 — 5:00 AM SGTUpdated on  September 20, 2016 — 11:25 AM SGT
 
 
 
 
  • Parliament to debate changes to accredited-investor regime
  • Singapore energy services companies hurt by oil price plunge

When Elaine Tham signed an “accredited investor” form with her bank in Singapore two years ago, she took a fateful step toward losing all the money she had set aside for her children’s education.

Based on her financial profile and investment priorities -- her need for S$150,000 ($110,000) to pay university fees -- a local branch of HSBC Holdings Plc had initially categorized her as a “medium risk” investor. But because the value of her property and car entitled her to “accredited” status, a category reserved for wealthy investors, Tham says she was persuaded to take a riskier path. She agreed to invest S$250,000 in the bonds of a small Singapore energy-services company, Swiber Holdings Ltd., which said in August that it won’t be able to repay its bondholders.

Tham is one of many Singaporeans who lost money by investing in Swiber, which sold an unusually high proportion of its bonds to the wealthy clients of banks in Singapore. Amid signs last week that more local energy-services companies are being dragged down by the prolonged slump in global oil prices, some are urging quick action to plug loopholes in Singapore’s investor-protection rules.

 

“It’s time for Singapore’s regulators to rethink how they define the accredited-investor regime,” said Christopher Chen, an assistant law professor at Singapore Management University. “Here, if someone happens to own a landed property, likely that person will become an accredited investor. If investors are really rich, it’s not a problem. But some people are semi-rich, or look rich on paper.”

488x-1.png

A Singapore-based spokesman for HSBC declined to comment on Tham’s case, referring inquiries about the sales practices of the bank’s relationship managers to its 2013 annual report. In that report, HSBC said it stopped linking wealth-management relationship managers’ incentives to sales volumes for the U.K. and France that year, and would make that effective in most markets by 2014.

Singapore law allows banks to automatically classify individual investors as “accredited” if they have at least S$2 million of assets or earned at least S$300,000 in the previous 12 months. By entering the category, the wealthy are given a greater range of investment choices but lose some of the key protections offered to ordinary investors -- such as restrictions on selling them certain riskier products. Swiber bonds were only available to accredited investors or those investing a minimum of S$250,000, according to Robson Lee, a Singapore-based partner at the U.S. law firm Gibson, Dunn & Crutcher LLP.

Property Riches

As property prices surged over the past decade, many middle-class Singaporeans entered the accredited investor category due to the high value of their homes. A mass-market 1,000 square-foot suburban apartment was worth S$1.26 million on average in the second quarter, Savills Plc data show, while a same-sized luxury apartment in the center of town would be worth S$2.34 million. About 20 percent of Singaporean households live in private housing, government data show.

 

“They are wealthy by technical definition, but in reality they may not have enough disposable assets to withstand such losses,” said Lee at Gibson, Dunn & Crutcher. “There are many Swiber bond investors who are left high and dry as they were persuaded by their bankers to buy such high-yield products with money they can ill afford to lose.”

More than 80 percent of some Swiber bond issues were sold to clients of Singapore private banks, which cater for the wealthiest investors. Swiber is currently under interim judicial management and missed a payment on a bond coupon in August, which triggered cross defaults on all its issues.

Legal Changes

Asked about the implications of the Swiber default for investor protection, the Monetary Authority of Singapore said it’s proposing revisions to the law which will prevent banks from assigning accredited investor status to those whose wealth is mostly in property. The changes will also require that individuals be allowed to decide if they wish to "opt in" to accredited status and thereby forgo the protections afforded to ordinary investors. The MAS plans to introduce the revisions to Parliament by the fourth quarter, it said Sept. 2 in an e-mailed response to questions from Bloomberg News.

Allowing wealthy investors to opt in to the accredited investor regime will bring Singapore up to the investor protection standards of Hong Kong and the European Union, the MAS said in its proposed amendments to the law.

Regardless of investors’ status, “private banks are expected to adopt fair business practices and act in the best interests of their clients,” the MAS said.

Hong Kong introduced safeguards earlier this year for wealthier people in the “individual professional investor” category, requiring banks to ensure that products they sell are appropriate for a client’s risk profile and financial situation.

Lehman Losses

Regulators in both Singapore and Hong Kong have sought to boost investor protection after mis-selling scandals at the time of the 2008 global financial crisis caused investors millions of dollars of losses. The most notorious was the sale of structured products linked to Lehman Brothers Holdings Inc. -- investments that soured rapidly following the U.S. bank’s collapse in September 2008. 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.

488x-1.png

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." The bank’s accredited investor clients "are kept informed of their AI status at various stages, including at the time of account opening, account review, and after every trade conducted," DBS added.

 

Kapoor said he would choose not to be an accredited investor, given the chance. “Who would understand the full consequence of being an accredited investor? It can be a grey area."

 

 

 

The most basic rule is not putting all your eggs in one basket, if they only have $250k, how / why they can invest all in the same vehicle? 

Shouldn't the RM advise them accordingly ? 

 

But if they have multi-millions, than $250k will be just " a little heart pain " to them. 

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when collecting and enjoying their coupon payouts every year, all keep quiet

 

when lose principal sum, all kpkb say cannot afford the loss

 

[dizzy]

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The most basic rule is not putting all your eggs in one basket, if they only have $250k, how / why they can invest all in the same vehicle?

Shouldn't the RM advise them accordingly ?

 

But if they have multi-millions, than $250k will be just " a little heart pain " to them.

Lesson learnt, they should surf mcf :D
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Lesson learnt, they should surf mcf :D

 

ya...learn from mcf, at least still can enjoy a nice car with 250k full cash

 

and gain respect from t2

 

:D

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More than 80 percent of some Swiber bond issues were sold to clients of Singapore private banks, which cater for the wealthiest investors. Swiber is currently under interim judicial management and missed a payment on a bond coupon in August, which triggered cross defaults on all its issues.

 

[jawdrop]

To them, default is no issue, cos they have nothing to pay anyway ... just default lor ...

 

I have no marnee to pay.

 

You beat die me lor.

 

I still no marnee to pay.

 

am beginning to wonder whether the big Africa project and the ang moh equity investor were real or not ...  [sly]

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[jawdrop]

 

I have no marnee to pay.

 

You beat die me lor.

 

I still no marnee to pay.

 

am beginning to wonder whether the big Africa project and the ang moh equity investor were real or not ...  [sly]

 

The project should be real la. They already disclosed the field operator right? If fake, the operator will be rushing to dispute it.

 

What they didn't disclose is that the operator didn't award the contract to them (not signed). Only LOI.

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Ok noted.  $250,000 = not really rich.

 

 

Bond losses show vulnerability of Singapore’s not-really-rich

http://www.todayonline.com/singapore/bond-losses-show-vulnerability-singapores-not-really-rich

 

SINGAPORE — When Ms Elaine Tham signed an “accredited investor” form with her bank in Singapore two years ago, she took a fateful step toward losing all the money she had set aside for her children’s education.

 

Based on her financial profile and investment priorities — her need for S$150,000 to pay university fees — a local branch of HSBC Holdings had initially categorised her as a “medium risk” investor. But because the value of her property and car entitled her to “accredited” status, a category reserved for wealthy investors, Ms Tham says she was persuaded to take a riskier path. She agreed to invest S$250,000 in the bonds of a small Singapore energy-services company, Swiber Holdings, which said in August that it won’t be able to repay its bondholders.

 

Ms Tham is one of many Singaporeans who lost money by investing in Swiber, which sold an unusually high proportion of its bonds to the wealthy clients of banks in Singapore. Amid signs last week that more local energy-services companies are being dragged down by the prolonged slump in global oil prices, some are urging quick action to plug loopholes in Singapore’s investor-protection rules.

 

“It’s time for Singapore’s regulators to rethink how they define the accredited-investor regime,” said Mr Christopher Chen, an assistant law professor at Singapore Management University. ”Here, if someone happens to own a landed property, likely that person will become an accredited investor.If investors are really rich, it’s not a problem. But some people are semi-rich, or look rich on paper.”

 

A Singapore-based spokesman for HSBC declined to comment on Ms Tham’s case, referring inquiries about the sales practices of the bank’s relationship managers to its 2013 annual report. In that report, HSBC said it stopped linking wealth-management relationship managers’ incentives to sales volumes for the UK and France that year, and would make that effective in most markets by 2014.

 

Singapore law allows banks to automatically classify individual investors as “accredited” if they have at least S$2 million of assets or earned at least S$300,000 in the previous 12 months. By entering the category, the wealthy are given a greater range of investment choices but lose some of the key protections offered to ordinary investors — such as restrictions on selling them certain riskier products. Swiber bonds were only available to accredited investors or those investing a minimum of S$250,000, according to Mr Robson Lee, a Singapore-based partner at the US law firm Gibson, Dunn & Crutcher.

 

As property prices surged over the past decade, many middle-class Singaporeans entered the accredited investor category due to the high value of their homes. A mass-market 1,000 sq ft suburban apartment was worth S$1.26 million on average in the second quarter, Savills data show, while a same-sized luxury apartment in the centre of town would be worth S$2.34 million. About 20 per cent of Singaporean households live in private housing, government data show.

 

“They are wealthy by technical definition, but in reality they may not have enough disposable assets to withstand such losses,” said Mr Lee at Gibson, Dunn & Crutcher. “There are many Swiber bond investors who are left high and dry as they were persuaded by their bankers to buy such high-yield products with money they can ill afford to lose.”

 

More than 80 per cent of some Swiber bond issues were sold to clients of Singapore private banks, which cater for the wealthiest investors. Swiber is currently under interim judicial management and missed a payment on a bond coupon in August, which triggered cross defaults on all its issues.

 

LEGAL CHANGES

 

Asked about the implications of the Swiber default for investor protection, the Monetary Authority of Singapore said it's proposing revisions to the law which will prevent banks from assigning accredited investor status to those whose wealth is mostly in property. The changes will also require that individuals be allowed to decide if they wish to "opt in" to accredited status and thereby forgo the protections afforded to ordinary investors. The MAS plans to introduce the revisions to Parliament by the fourth quarter, it said Sept on 2 in an e-mailed response to questions from Bloomberg News.

 

Allowing wealthy investors to opt out of the accredited investor regime will bring Singapore up to the investor protection standards of Hong Kong and the European Union, the MAS said in its proposed amendments to the law.

 

Hong Kong introduced safeguards earlier this year for wealthier people in the “individual professional investor” category, requiring banks to ensure that products they sell are appropriate for a client’s risk profile and financial situation.

 

LEHMAN LOSSES

 

Regulators in both Singapore and Hong Kong have sought to boost investor protection after mis-selling scandals at the time of the 2008 global financial crisis caused investors millions of dollars of losses. The most notorious was the sale of structured products linked to Lehman Brothers Holdings — investments that soured rapidly following the US bank’s collapse in September 2008. Sixteen Hong Kong banks were forced to repay about US$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 Mr 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 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 per cent 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 per cent of purchases of US 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, Mr 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.

 

Under the proposed revisions, he would have been given the chance to opt out of 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.” The bank’s accredited investor clients “are kept informed of their AI status at various stages, including at the time of account opening, account review, and after every trade conducted”, DBS added.

 

Mr Kapoor said he would choose to opt out of his accredited investor status, given the chance. “Who would understand the full consequence of being an accredited investor? It can be a grey area.” BLOOMBERG

 

 

 

 

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upgraders with 25 years loan on their assess 

living in a mickey mouse $1.26M ulu condo = HNWI? muahahahaha

 

As property prices surged over the past decade, many middle-class Singaporeans entered the accredited investor category due to the high value of their homes. A mass-market 1,000 sq ft suburban apartment was worth S$1.26 million on average in the second quarter, Savills data show, while a same-sized luxury apartment in the centre of town would be worth S$2.34 million. About 20 per cent of Singaporean households live in private housing, government data show.
Edited by Wt_know
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