O&M lessons for investors in high-yield perpetuals

DEBT-laden offshore and marine (O&M) companies that issued high-yield bonds have recently garnered unwanted attention. Less than half a year after offshore engineering firm Swiber Holdings went into judicial management, offshore vessel owner Swissco Holdings said in November that it would suffer the same fate after its lenders rejected debt restructuring proposals, from both the firm and an unnamed Chinese investor. Swissco and its subsidiary Swissco Offshore (Pte) Ltd have since filed for judicial management.

Other companies in the sector have also already defaulted on interest payments and appear to be teetering on the brink, with not much except the continued benevolence of their bankers to avert a collapse. It is probably safe to assume that when investors put money into those O&M corporate bonds, they likely did not consider…