SINGAPORE — One of Singapore’s foremost oil traders, Hin Leong Trading, is now struggling to stay afloat amid a plunge in crude oil prices and greater scrutiny by banks that has left it facing a cash crunch.
The company had by Wednesday submitted a court filing requesting a moratorium on payments on nearly $4 billion in debt, Reuters reported. While Hin Leong has not disclosed the reason for its financial woes, the collapse in oil demand amid the coronavirus pandemic may have squeezed its earnings to the point where repayment became impossible.
The market turmoil is laying bare troubles that go back years. Hin Leong had concealed $800 million in losses from futures trading, according to the Singapore-based Business Times.
Founder Lim Oon Kuin ranks among the leading oil industry figures in a city-state that is a major Asian hub for energy trading and transport. But the sector has been far from immune from the economic disruption caused by the pandemic.
Banks are increasingly wary of lending to oil traders and shippers given the uncertain outlook, raising fears of a potential string of bankruptcies of small and midsize businesses.
Singapore’s government is scrambling to contain the damage. The Monetary Authority of Singapore on Tuesday urged lenders “not to de-risk indiscriminately from the bunkering and oil trading sectors.” Government agencies have emphasized diversity in the sector, noting that the city-state has more than 130 oil traders and 43 fuel storage companies.