Singapore. Oilfield services firm Ezra Holdings's decision to file for bankruptcy in the United States pushed down Singapore's oil and gas index by 1 percent on Monday (20/03), amid concerns of more pain ahead for the city-state's beleaguered oil and gas sector.
Ezra is one of several Singapore offshore and marine services firms that have been hurt by a downturn in oil prices since 2014, forcing many to restructure bonds and loans and cut costs to keep afloat.
Ezra filed for United States Chapter 11 bankruptcy on Saturday, saying it had unsecured loans to banks, including $272 million owed to Singapore lender DBS Group Holdings and $184 million owed to Oversea-Chinese Banking.
"It's a sizeable company with huge amount of assets and liabilities. At this point in time we have no knowledge of how much of the assets could be written down," said Terence Lin, assistant director of bonds and portfolio at online financial products distributor iFAST.
Ezra's subsea services affiliate Emas Chiyoda Subsea has also sought bankruptcy protection.
Singapore banks, which were caught off-guard by the collapse of Swiber Holdings last year, have stepped up provisions for sour loans to the oil services sector over the past year and had been forecasting more pain for the troubled sector.
"We have been stress testing this sector since the third quarter of 2015, and in the process identified a list of customers that could be negatively impacted," OCBC said in a statement on Monday.
OCBC said it had repeatedly highlighted that though the problem in the oil and gas sector in its portfolio had not broadened, it had deepened. It said it had created specific provisions and additional general provisions for its oil and gas portfolio, but it declined give details of specific customers.
DBS said in a statement: "our exposures to Ezra Holdings were moved to non performing in the third quarter, and suitable provisions have been made."
The FTSE ST oil and gas index was down 0.9 percent on Monday while Ezra stock was suspended.
Separately, shares in marine firm Nam Cheong fell 30 percent after the company said its auditors highlighted uncertainty over its ability to continue as a going concern.