Here's why banks won't be pulling Ezion's credit anytime soon

Most of the loans are secured by liftboat assets.

Ezion will still be able to count on banks for loans, as the company's profits are safe from drying up anytime soon.

According to a report by Maybank Kim Eng, most of the bank loans are secured by Ezion's liftboat assets.

"In our view, it is logical for banks to support Ezion, whose assets are still generating cashflows and is profitable. Unlike drilling rigs and OSVs, there is no oversupply of liftboats," the report stated.

Pulling out credit at this time would hurt banks worse given that they cannot squeeze out as much value from those assets alone.

On top of this, if Ezion manages to pay down its debt by FY18 as scheduled, it would have de-levered Ezion's net gearing of about about 0.6-0.7x. This means that Ezion would be in a better position to refinance.

The report also noted that Ezion's bonds show no signs of distress.

"Unlike weaker oil services players whose bond yields are 23-33%, the bond market is pricing Ezion’s bonds at average of 8.4% which does not suggest cashflow is distressed at this point," the report asserted.