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More mid-sized firms in S'pore tapping bond market

The bond market in Singapore has been active -- with 56 new bond listings in April alone -- hitting a new monthly high for this year. Some industry observers said, the growth in the bond market is partly driven by the entry of mid-sized Singapore corporates.

SINGAPORE: The bond market in Singapore has been active -- with 56 new bond listings in April alone -- hitting a new monthly high for this year. This year's previous high was 44 issues in January.

Hainan Airline sold S$341 million worth of yuan-denominated bonds in Singapore -- marking the first corporate "Lion City" bond issuance.

Some industry observers said the growth in the bond market is partly driven by the entry of mid-sized Singapore corporates.

Shopping centre Mustafa has done it, so has jeweller Aspial, and offshore and marine services firm Ezra -- these companies issued bonds this year, and are among a growing number of mid-sized Singapore firms tapping the debt markets.

Clifford Lee, managing director and head of fixed income at DBS Bank, said: "Because of the deepening market and the development in the Singapore dollar bond market, now they are able to have an added option.

"To be able to tap the bond market for tenors, for amounts, and for structures that were previously not available to them via (loans from) the banks -- it's a very healthy form of diversification. (It) gives them more funding options, and more financial stability going forward."

More than S$6.4 billion worth of Singapore dollar bonds were issued in the first quarter this year, up by almost 20 per cent from the same period a year ago.

Geoff Howie, director of market strategy at Singapore Exchange, said: "The bond issuers are looking at structuring their bond issuances to take into account rising interest rates, and investors are looking at these floating notes to mitigate against the risks of rising interest rates."

These bonds have mainly been snapped up by insurance companies, asset managers, and private banking clients who are seeking stable yields amid volatile equity markets.

Mr Lee added: "Different kinds of bonds will tend to draw in different kinds of investors. Having said that, the general complaint is that -- notwithstanding the activities that you're seeing -- there's still (an) insufficient number of bond issues to meet the demand.

"The level of liquidity for bonds remains very high across the region as well as in Singapore."

Unit trust distributor Fundsupermart said there is growing interest in bonds from small-time retail investors too.

Wong Sui Jau, general manager at Fundsupermart.com, said: "You don't get returns that are very different at this point in time. But the risk level -- perceived risk level and the actual risk level -- for equity funds are certainly higher, compared to bond funds.

"Hence, that might have resulted in investors taking a stronger interest in bond funds as opposed to equity funds."

Fundsupermart said that for the year to date, bond funds and equity funds are giving roughly the same returns of around two to three per cent.

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