Straits Times - Singapore companies’ debt surge in 2024: Sustainable or risky gamble?
Singapore’s corporate debt market surged in 2024, with new issuances rising 34 per cent year-on-year to $308 billion, as businesses capitalised on favourable market conditions and investor demand.
With tighter credit spreads and improving access for investors, especially in the retail space, Singapore continues to cement its role as a vibrant debt capital market hub. But is this debt surge a sustainable one or a risky gamble?
In an interview, with Straits Times, Ellyn Tan, Partner, Financial Advisory (Restructuring & Insolvency) shared her insights on the outlook of this debt surge in the economy, while highlighting the importance of distinguishing sustainable borrowing from short-term fixes.
Ellyn shared, "The key question is whether this increase is funding expansion or just refinancing older loans. An overall increase can signal growth, but we need to assess if these are truly ‘good loans’."
Additionally, while corporate bonds offer higher returns as compared to government bonds, the risks accompanied is higher as well.
"Most corporate bonds are raised to fund growth projects, but there’s no guaranteed fail-safe project. Every investment carries its own risks," she noted.
Read the full article on the Straits Times
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