SGX opens up wholesale bonds to retail investors

Interior of the SGX Centre, which houses the Singapore Exchange Ltd.
Interior of the SGX Centre, which houses the Singapore Exchange Ltd. ST PHOTO: LIM YAOHUI

SINGAPORE - Starting Thursday (May 19), retail investors here will be able to invest in a suite of bonds previously closed off to them.

Singapore Exchange has introduced a new "bond seasoning framework", to open up the market for wholesale bonds.

Traditionally, wholesale bonds are only offered to institutions and accredited investors.

Under the new framework, they will still only be offered to these groups in the first six months after being listed on the SGX.

But after that "seasoning" period, retail investors will be able to invest in them too, with outlays as little as $1,000.

But not all wholesale bonds will be made accessible to the retail market. To be eligible under the framework, the bond issuer will have to meet criteria relating to their size, track record and listing history.

SGX currently lists 1,900 wholesale bonds which are only available in large denominations of at least $200,000, and most are only offered to institutions or accredited investors.

The new framework will also allow eligible issuers to make subsequent direct offers of bonds, called a "re-tap", to retail investors under the same terms as the existing wholesale bonds without a prospectus, following the six-month seasoning period.

Separately, the Monetary Authority of Singapore (MAS) also announced an Exempt Bond Issuer Framework on Thursday.

Under this framework, issuers that satisfy thresholds relating to their track record that are higher than the eligibility criteria under the seasoning framework can offer bonds directly to retail investors at the onset without a prospectus.

Issuers under both frameworks must meet the requirements under regulations introduced on Thursday by the MAS.

Bonds issued to retail investors under both frameworks can be bought and sold via SGX.

SGX chief executive Loh Boon Chye said: "Retail investors are greatly interested in fixed income investments. The frameworks will widen the range of fixed income products and enable retail investors to access some of the 1,900 wholesale bonds listed on SGX, Asia's leading bond-listing platform."