MAS launches grant to encourage companies to issue rated Singdollar bonds

The Monetary Authority of Singapore (MAS) building in Shenton Way.
The Monetary Authority of Singapore (MAS) building in Shenton Way.ST PHOTO: FILE

SINGAPORE - Singapore's banking and financial markets regulator has unveiled a grant to encourage companies to issue bonds in the Singapore dollar bond market that are credit rated.

Making credit ratings more readily availablein the domestic bond market will help improve market transparency, by providing timely and independent assessments of the credit worthiness of issuers throughout the life of a bond, the Monetary Authority of Singapore (MAS) said in a statement on Friday (June 30).

The regulator noted that only about half of the outstanding volume of Singdollar bonds are rated.

Credit ratings can also benefit bond issuers, MAS said.

Many regular issuers in the Singdollar bond market are currently unrated and rely mainly on the same pool of domestic investors.

Credit ratings will allow these issuers to attract a broader and more diverse investor base, including international institutional investors.

To encourage more issuers to obtain credit ratings, the grant - called the SGD Credit Rating Grant - will help issuers offset the associated costs over a five-year period.

Qualifying issuers of Singdollar bonds who obtain credit ratings from an international credit rating agency will be able to claim up to 100 per cent of their credit rating expenses, subject to a funding cap of S$400,000 per issuer.

The SGD Credit Rating Grant is open to both foreign and domestic issuers.

"MAS strongly encourages all issuers in the SGD bond market to rate their bonds. This will help provide greater transparency to investors, broaden the pool of market participants, and grow the Singapore dollar bond market," said Ms Jacqueline Loh, the deputy managing director of MAS.

"We also urge investors to carry out proper due diligence and understand the credit ratings and other indicators of financial strength of an issuer before investing," she added.