Wealthy individuals who had been buyers of Singapore dollar bonds are cutting their desire to hold such paper, a report says.

Wealthy individuals who had been buyers of Singapore dollar bonds are cutting their desire to hold such paper, potentially raising questions about the ability of some companies to raise money in the Asian city’s markets, according to a Reuters report.

Media reports noted that local currency high-yield bonds (known sometimes as junk bonds) were hit as private banks began to sell out of their positions. The worst-affected bonds were those hit by Swiber Holdings, the offshore oil and gas industry firm. Reuters said Swiber's 9.75 per cent senior perpetual bond, callable in 2016, were priced at a yield as high as 21 per cent to the call last week, which would make it impossible to sell them at present.

The report noted that reluctant private banks also explained some of the weakness in paper issued by Aspial Corp, the listed jewellery firm. The S$100 million four-year debt issuance of Aspial attracted a book of just over S$100 million ($77.1 million), leaving little upside for the bonds in the secondary markets despite a higher yield and a 50 cent rebate to private banks, the report said.

The reluctance of private banks to hold such debt is potentially significant because in the past, WealthBriefingAsia has heard that advisors for high net worth investors, such as private banks, have been among the most enthusiastic buyers of such paper in Asia.