, Columnist
Asia's Private Banks Deserve Gratitude
More companies are selling covenant-lite debt, allowing them to earn a higher return on equity.
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Investors in Asian equities need to print some extra thank-you cards. They would be remiss in not showing their gratitude to the region's private banks, and their clients' quest for yield.
Of the 82 bond issues in Singapore by publicly traded Asian companies in 2017, only 39 percent included a promise by the borrower to restrict leverage. For the first time in seven years, a majority of corporates in the city-state are selling so-called covenant-lite debt. This is odd, because Singapore's wealthy have suffered an unprecedented S$1.35 billion ($992 million) in local note defaults, according to a report Tuesday by Denise Wee of Bloomberg News. Many are stuck with losses as restructuring drags on.