Markets Insights

Ezra's bankruptcy filing could shake sentiment

Ezra Holdings yesterday (March 19) announced that it has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.
Ezra Holdings yesterday (March 19) announced that it has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.PHOTO: EZRA HOLDINGS

Meanwhile, traders seek signs regarding US Fed's tone on pace of future rate hikes

The bankruptcy filing of troubled oilfield services firm Ezra Holdings over the weekend could put a dent in market sentiment when trading opens today.

The group yesterday announced that it has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.

The move, Ezra said, is intended to "optimise the scope and extent of the restructuring options available and to protect the interests of all stakeholders of the company (including its creditors and shareholders) from hostile actions that could harm the company and its stakeholders by diminishing the group's value".

A Chapter 11 filing typically protects the debtor from legal and enforcement action worldwide.

Ezra also said in a separate statement that it will be convening an informal meeting with bond holders of its $150 million of 4.875 per cent notes, which are due next year, to provide updates on the situation.

Its shares have been suspended since last Wednesday, when they traded at an all-time low of 1.1 cents.

The group's latest filing comes after its debt-ridden joint venture Emas Chiyoda filed for bankruptcy protection in the US late last month - adding to the troubles faced by the local offshore oil and gas services sector, which has been hit hard by the oil price weakness.

Ezra's latest filing comes after its debt-ridden joint venture Emas Chiyoda filed for bankruptcy protection in the US late last month - adding to the troubles faced by the local offshore oil and gas services sector, which has been hit hard by the oil price weakness.

Ezra's bankruptcy filing is likely to have a trickle-down impact on other firms in the sector, as well as on the local banks.

"Offshore and marine companies and banks would be negatively affected by this development. No one knows if they have fully provided for Ezra," UOB Kay Hian analyst Foo Zhiwei told Bloomberg.

Meanwhile, much of the market's focus will likely remain on the US Federal Reserve, which raised interest rates, as expected, last week, without taking on a more aggressive stance on the pace of subsequent hikes.

Traders will be looking out for any signs of clarification regarding the Fed's tone at member speeches throughout the week, including that of Federal Reserve Bank of Minneapolis president Neel Kashkari, the only dissenter on the latest rate hike. Fed chair Janet Yellen is due to give a speech on Thursday.

The lack of commitment to free trade from global financial leaders at the recently concluded G-20 meeting will also set the tone for trading.

IG market strategist Jingyi Pan noted that several Asian markets, including Singapore, managed to push higher last week, taking cues from the US and remaining largely resilient. "The week ahead could see markets tested by economic indicators instead," she said.

Singapore's industrial production figures for last month are due this Friday - with growth expected to improve, said a Moody's Analytics report. "Early indicators suggest that manufacturing in Singapore is expanding well, though not as fast as at the end of 2016," it noted.

The Straits Times Index added 5.86 points or 0.19 per cent to 3,169.38 last Friday - up by 36.03 points or 1.15 per cent for the week.

Property stocks continued to be in play in the wake of the recent changes to cooling measures. City Developments, for example, jumped by 4.5 per cent for the week to finish at $10.61 on Friday.

M1's three largest shareholders - Axiata Group, Keppel Telecommunications & Transportation and Singapore Press Holdings - are undertaking a "strategic review" of their stakes in the telco.

The shareholders said after markets closed on Friday that they have jointly appointed Morgan Stanley Asia (Singapore) as financial adviser to assist with the strategic review, which "may or may not lead to a transaction".

A version of this article appeared in the print edition of The Straits Times on March 20, 2017, with the headline 'Ezra's bankruptcy filing could shake sentiment'. Print Edition | Subscribe