Singapore companies are now the third most indebted in Asia, behind China and India, as the overall economy slows, according to GMT Research Ltd.
The level of indebtedness has reached a "danger threshold," Gillem Tulloch told Bloomberg Businessweek.
Private company debt in the city-state reached six times the amount of operating cashflow in 2013 for non-financial domestic firms, up from 5.1 times in 2012, GMT Research said in its report.
"It's a bit surprising that Singaporean companies seem to have leveraged up significantly over the past few years," said Tulloch. "There's been a slight loss of discipline, or it could be that the growth has not come in as expected."
According to the Hong Kong-based research group, growth is likely to slow down in Singapore as it cannot be sustained without additional stimulus or irresponsible bank lending.
The leverage ratio in China soared to 7.5 times the amount of operating cashflow in 2013, up from 6.8 in 2012, while India's ratio hit 8.1 times last year, up from 7, according to the report.
The yawning gap between debt and cashflow ratio suggests that investment for business expansion could be in decline, the report said. Affected industries include the materials and energy sectors.
"There is a high potential for a growth scare there," Tulloch said. "Singaporean companies, from my experience, are quite well run. You would expect them to pare back capital expenditure in 2014 to restore their balance sheets."
Singapore's government said in May it expects "modest" expansion in 2014.