The letter "Retail investors in Hyflux bind: Issuing of perpetual bonds should be better regulated" (April 23) raised many valid points.

Chief of these was that perpetual bonds have carry-on credit risk, where bond issuers can experience financial trouble or shut down, and so, they are not suitable for everyone.

Black swan events are unexpected — outlier risk events that, when they materialise, produce catastrophic consequences.

For instance, no one expected an institution such as Lehman Brothers to go bust in 2008. Everyone thought it was just simply impossible.

The only way to mitigate such risks to our investment portfolio is to not become complacent and to always stay informed, as well as to observe some golden rules of investing such as diversification, portfolio re-balancing and constant monitoring.

As a public-listed company, Hyflux's annual reports are available for all to see.

In recent years, its main source of funds were perpetual bonds and preference shares, and its debt-to-equity ratio had been trending upwards steadily.

Net cash from operating activities had been negative since 2010, with losses occurring since 2015.

Dividend payouts were sustained not by organic earnings, but only because of asset liquidation and heavy borrowings.

Public sources of credit risk information also suggested that Hyflux’s credit risk rating had become impaired and had turned non-investment grade — a clear sign of financial distress — as early as 2016.

Hyflux was once the darling of the stock market but, like everything else, is not immune to the vagaries of the financial universe.

In addition to the points raised in the letter about regulating the issuance of perpetual bonds, it also behoves us all to be better-informed investors and to exercise supreme caution when it comes to market changes, by constantly monitoring our investment portfolio.