Citi pointed the finger at oil and gas in a research note published on Tuesday. The Southeast Asian city-state is home to the world's largest offshore rig builders, Keppel Corporation and Sembcorp Marine, who had slashed jobs and closed down yards to cope with the downturn.
And the outlook remains muted, Citi said in the note, with projects still getting deferred and new orders slow to come by, despite oil prices recovering from recent lows after output cuts by major producers.
"The order backlog for Keppel Corp for example, at $3.5 billion Singapore dollars ($2.5 billion) in (the first quarter of 2017) … (were) mostly repair related," the bank's analyst Wei Zheng Kit said in the note, adding that orders are still far below 2013's peak of $13.1 billion Singapore dollars.
Citi's view of the Singapore oil and gas sector is shared by local brokerage UOB Kay Hian, who said in a note last week that "expectations for a strong production order-led recovery may not pan out" this year.
Citi's Kit noted that lingering concerns of defaults among oil and gas companies may lead to tighter financing conditions for other highly-leveraged sectors such as real estate.
"Our own estimates suggest $5.8 billion of bonds of real estate, oil and gas, and homebuilding companies maturing from Dec 2016 till end 2018," he said.
Debt woes by oil and gas companies were behind the build-up in non-performing loans at Singapore's three major banks over the past year. But market watchers said the formation of bad loans is expected to slow, and Moody's Investors Service has also raised Singapore banks' outlook to "stable" from "negative".