Confusion, disappointment, anger.
These are the emotions felt by Keith and a group of fellow bond holders as their investments look to be in jeopardy.
Keith, 43 and self-employed, and who did not want to give his full name, belongs to a group of 75 people who put their money in the $200 million, 8.5 per cent bonds issued by Pacific Andes Resources Development (Pard) in 2014.
Some of the bond holders reached out to each other after the Singapore-listed seafood company defaulted on its bonds' coupon payment in January this year.
As Pard filed for protection last month, Keith said he hopes he and the other investors he has contacted can recover some of their funds.
"I have bought one lot of the bonds for $250,000 and others have bought two or three lots. One of us has six lots - worth $1.5 million. Together, our group's holdings account for 12.5 per cent of the bonds."
Keith's story illustrates how Singapore's bond market, which has been going from strength to strength, could be entering choppy waters.
Figures from the Monetary Authority of Singapore (MAS) show that the corporate debt market grew at a compound annual rate of 14 per cent from 2010 to 2014, with total outstanding debt reaching $308 billion at the end of 2014. About $200 billion worth of debt in various currencies was rolled out that year.
Singdollar-denominated corporate bonds are a relatively small but gradually growing part of the market. "The Singdollar corporate bond market has averaged $20 billion to $25 billion in annual issuances over the last few years.
"As at June this year, the total outstanding amount of Singdollar corporate bonds has grown to about $140 billion," an MAS spokesman told The Straits Times.
Issuers of Singdollar corporate bonds comprise companies, banks, as well as government agencies and statutory boards. In January this year, the Housing Board sold a seven-year issue worth $1 billion, with a coupon rate - or annual yield - of 2.5 per cent.
Foreign issuers are also tapping the Singdollar market. In March, there was a strong take-up for ABN Amro Bank's 10-year, 4.75 per cent issue, while United States-based Ford Motor Credit Company offered a three-year, 3.7 per cent issue in its third Singdollar deal.
While these rates are nothing to be sniffed at, Singdollar bonds by local issuers or companies have found more favour.
So far, this year, there have been around a dozen issues that offer coupon rates upwards of 5 per cent, such as the 6 per cent perpetuals by water-treatment company Hyflux, and Courts Asia's three-year bonds, at 5.75 per cent.
Issuers in the property sector have also been active, such as property developer and jewellery firm Aspial's April issue of four-year bonds at 5.3 per cent, and healthcare real estate investment trust First Reit's 5.68 per cent perpetuals.
BIGGER BUT RISKIER
With bank fixed-deposit rates hovering at about 1.5 per cent, these are attractive returns.
Aberdeen Asset Management Asia investment manager Gareth Nicholson said: "We see from our funds and recent request for proposals that demand for Singdollar bonds has been strong…
"We can see how Singapore bond yields have rallied tighter but, at the same time, the Singdollar market has been flooded with high-yield issuers, mostly small to medium-sized companies in Singapore."
Many of these bonds are snapped up by private banks for their clients. MAS data shows that private banking investors took up 43.5 per cent of Singdollar bond issuances at last count.
"Low deposit rates and the growing hunt for yield have been a big driver for the Singdollar bond market. The banks are assisting issuers in placing bonds by supporting new issues through trading desks and, at the same time, helping to find private placements, so these smaller issuers have experienced a sweet spot for cheap Singdollar debt," Mr Nicholson said.
But investors may think twice about investing in these smaller issues now, given the recent bond defaults.
Pard's default in January followed that of Indonesian mobile phone retailer Trikomsel in November last year. And then there's Swiber Holdings, which last month applied for judicial management as it fell victim to prolonged oil and gas market woes. Swiber has $551.8 million in outstanding debt in the market.
These defaults have raised questions over whether the fast pace of growth in the bond market has also thrown open the door for riskier issuances.
FEWER BOND ISSUES
DBS Bank recently found itself in the spotlight for its loan exposure to Swiber. DBS, the largest arranger of Singdollar bonds, was also one of the arrangers of Swiber's bonds, along with ANZ, Maybank and RHB.
It may not seem the case but bond issuance has come down from its peak. "In terms of annual issuance volume, the Singdollar market hit its highest in 2012 with $31.1 billion, but since then, it has cooled off to $23.6 billion in 2014, and $22.9 billion last year," DBS fixed income head Clifford Lee said.
"If we look at issuers with market cap smaller than $1 billion, the number has also been dropping. The total issued volume by these companies was the highest in 2014 at $4.64 billion, and then it fell to $1.48 billion last year. So far, this year, the volume has been $1.18 billion," he added.
Safeguards in place, but individual responsibility key
So, the perception that more risky bonds by smaller firms are swamping the market has little basis. These smaller issuers' ability to tap the market has, in fact, dwindled since mid-2014, Mr Lee said.
"This reflects the greater risk-off sentiment among the private banks, which have turned more cautious after the oil price collapse in 2014," he added.
Meanwhile, the Singdollar bond market framework has also been strengthened with the introduction of best practices from more mature overseas markets. Said Mr Lee: "For instance, we now have a proper book-building process, according to the standards set by the International Capital Market Association, to ensure everyone in the market gets the same set of information, at the same time. DBS had its first intra-day book-building exercise in 2008."
While some may now argue that only bonds that are investment grade should be marketed, there are large investors - not individuals - who may be keen to invest in riskier but higher-yielding bonds.
Said Mr Lee: "All bond issues, investment grade or not, are shown by arranging banks to their entire pool of investors, including insurance firms, asset managers, hedge funds, sovereign wealth funds, as well as private banks.
"Many of these investors have portfolios that specifically cater to investments in non-investment grade bonds... It is difficult to restrict private banks from such issues as arranging banks will be required to offer the same options to the other investors, in the interest of fairness."
CHECKS AND BALANCES
For bonds sold to retail investors, MAS requires issuers to disclose the product's financial information through a prospectus.
Most Singdollar corporate bonds are also listed on the Singapore Exchange, which brings with it requirements for disclosure of information.
The financial institutions that distribute the products must also conduct their due diligence to ensure a consumer is recommended a suitable product by a competent representative who provides quality advice.
Despite the framework, some investors still feel aggrieved because of their losses. But banks have said that there are sufficient safeguards in place to prevent unaccredited or uninformed investors from being exposed to higher-risk products.
A UOB spokesman said: "UOB provides advice and recommendations from a pre-selected list - on bonds of investment-grade quality - to our clients who seek to diversify their investment portfolio. For clients who request bonds that are not on the bank's pre-selected list, no advice will be provided."
OCBC corporate communications head Koh Ching Ching said: "The corporate bonds highlighted in the media recently were assessed to be riskier investment products and were marketed or sold only to customers with aggressive investment risk appetites."
As well, only accredited investors - those with at least $2 million in net personal assets or with over $300,000 of income in the past 12 months - are allowed to access such investments.
Still, MAS has said that safeguards cannot replace the need for individuals to take responsibility for their investments.
MAS deputy managing director Ong Chong Tee said: "As with all investment products, there are both benefits and risks involved in corporate bonds.
"Investors need to assess the risk that a corporate issuer could fail and not be able to return the principal invested. It is prudent to diversify one's investments and avoid a concentrated exposure to any one corporate issuer."