SINGAPORE: The Monetary Authority of Singapore (MAS) announced on Thursday (Nov 17) that it will be introducing an Asian Bond Grant next year to make it more attractive for Asian issuers to raise international capital in Singapore.
Asian issuances that qualify for the grant will be able to offset up to 50 per cent of one-time issuance costs such as international legal fees, arranger fees and credit rating fees.
Speaking at the Asia Securities Industry and Financial Markets Association Annual Conference, MAS' deputy managing director Jacqueline Loh said the initiative is among several others by the authority aimed at strengthening Asia’s bond markets.
These initiatives also allow issuers in the region to benefit from Singapore’s ecosystem, in order for the region to “raise the needed long-term capital for sustainable growth” to “fully reap the fruits of favourable macro trends”.
Ms Loh said MAS is considering ways to nurture a “healthy and sustainable credit rating culture in (Singapore's) bond market”.
For instance, it could consider extending the Asian Bond Grant scheme, for Singapore Dollar bonds, only to rated issuances. Another possibility is to help existing issuers offset costs in obtaining a credit rating.
Ms Loh also said MAS will also continue to work with the industry to deepen liquidity in the secondary market.
Addressing the issue of the recent slew of defaults and restructuring exercises in the domestic bond market, Ms Loh said “rising defaults over the late part of the credit cycle and difficulties in particular sectors are to be expected”.
However, she said MAS’ stress test suggests that "most corporates in Singapore remain fairly resilient and banks’ exposure to weaker issuers are likely to be manageable”.