Asian bond issuers can get grant to offset issuance costs

The Monetary Authority of Singapore (MAS) will introduce the Asian Bond Grant next year in a bid to add to the breadth and diversity of debt instruments available.
The Monetary Authority of Singapore (MAS) will introduce the Asian Bond Grant next year in a bid to add to the breadth and diversity of debt instruments available.PHOTO: ST FILE

A new scheme that subsidises bond issuance costs will be launched next year to make it more attractive for Asian bond issuers to raise international capital in Singapore.

The Monetary Authority of Singapore (MAS) will introduce the Asian Bond Grant next year in a bid to add to the breadth and diversity of debt instruments available, said the banking regulator's deputy managing director Jacqueline Loh.

She was speaking at the Asia Securities Industry & Financial Markets Association's annual conference held yesterday at the Marina Mandarin Singapore.

Under this new scheme, qualifying Asian issuances 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.

The central bank also wants to encourage rated bond issuances, said Ms Loh. Rated issuers will be eligible for a larger grant amount under the Asian Bond Grant.

She also addressed concerns over mounting bond defaults in the oil and gas sector.

"MAS' stress test suggests that most corporates in Singapore remain fairly resilient, and banks' exposures to weaker issuers are likely to be manageable," said Ms Loh.

The regulator has received feedback calling for a review of bond market regulations - ideas include recourse for investors when a bond defaults and the need for credit ratings. The MAS is considering these suggestions, she said.

A version of this article appeared in the print edition of The Straits Times on November 18, 2016, with the headline 'Asian bond issuers can get grant to offset issuance costs'. Print Edition | Subscribe