MAS subsidies drove first-time Singapore bond issuances in 2019: Report

SINGAPORE (THE BUSINESS TIMES) – Subsidies from the Monetary Authority of Singapore (MAS) drove first-time bond issuances in Singapore in 2019, according to findings from its Singapore Corporate Debt Market Development 2019 report.

MAS noted that there had been a significant increase in debutant Asian issuers in Singapore’s bond market since the Asian Bond Grant (ABG) Scheme’s launch in 2017. Many of the issuers came through the ABG Scheme.

As a result of the scheme, average annual first-time issuance volume more than doubled during the scheme period of 2017 to 2019, compared with the prior 2014 to 2016 period, MAS noted.

The ABG Scheme supports up to 50 per cent of typical bond issuance-related expenses for first-time Asian issuers in Singapore’s bond market, subject to a cap of $400,000 for rated issuances and $200,000 for unrated ones.

Overall, Singapore’s bond market maintained the record issuance volumes of $95 billion achieved in 2018, with Singapore dollar-denominated (SGD) bond issuance registering good growth in 2019. The size of Singapore’s total outstanding corporate bonds rose 10.2 per cent to $420 billion as at Dec 31, 2019.

Out of the $233 billion in total debt issued in 2019, 87.7 per cent or $204 billion came from non-SGD debt issuances, underscoring the strong international characteristics of Singapore’s corporate debt market, MAS said.

The US dollar remained the primary currency of issuance, representing 69.3 per cent of total issuance volume in 2019.

Singapore’s debt market has continued to grow, with total debt outstanding registering 11 per cent growth year on year to reach $472 billion. This represents a compound annual growth rate of 8.5 per cent since 2015, MAS said. SGD debt outstanding reached $165 billion, while non-SGD debt outstanding reached $307 billion.

Corporate issuers accounted for the majority of issuance volume at 45.6 per cent for both non-property and property corporations, including special-purpose vehicles.

Financial institutions were the next highest to account for issuance volume, taking up 31.7 per cent of total volume. This is followed by government agencies and statutory boards, which accounted for 22.7 per cent.

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