How MAS is deepening the financing ecosystem for local, regional firms

It is working to make Singapore a viable place for Asian firms to issue bonds.

The Monetary Authority of Singapore (MAS) is actively working with the industry to deepen the financing ecosystem for regional and local firms, the central bank managing director Ravi Menon said.

In a speech during the presentation of the MAS annual report, Menon said the central bank is doing this in three ways. First, MAS is working to strengthen the venture capital and private equity financing ecosystem to serve Asian growth companies.

"The next-generation Asian growth companies, with their new ideas and models, have injected vibrancy to our corporate landscape. Venture capital and private equity (VC/PE) play an important role in supporting the growth of such companies and stimulating innovation. We have a small but thriving VC/PE industry. VC/PE assets under management has grown at a compound annual growth rate of 28% over the past 5 years. But we need to do more – given the growing numbers of Asian growth companies and their tendency to stay private for longer and not go the IPO route," the managing director said, noting the simplification of the regulatory framework for VC managers.

Some of the initiatives MAS has undertaken include anchoring more regional and global VC and PE players in Singapore, deepening the talent pool, enhancing ancillary professional services to better support VC activity, and building a pipeline of alternative market platforms that can facilitate private market exits for PE/VC investors.

MAS is also working to strengthen Singapore’s value proposition for Asian companies to issue bonds.

"Let me mention three schemes that MAS has put in place to make Singapore the choice location for regional bond issuance. To attract new Asian issuers to Singapore’s bond market, MAS introduced the Asian Bond Grant scheme earlier this year. To support bond issuers adopting environmentally sustainable practices, there is a Green Bond Grant scheme. And the latest, to encourage issuers to be rated and to nurture a healthy credit rating culture in the SGD bond market, MAS will soon be introducing a SGD Credit Rating Grant," Menon said.

The MAS managing director also indicated the efforts to expand the industry’s capacity to finance Asian companies’ international trade activities.

"Trade financing needs will grow as Asian companies expand and internationalise. We need innovative solutions to make trade finance an investible asset, so as to attract a broader pool of investors and provide banks the capacity to originate new trade finance lending," he stated.

One such innovation is the Capital and Credit Risk Manager (CCRM), an electronic trading platform for trade finance assets.

He noted that if this turns out to be successful, it will help deepen the pool of trade financing available to companies.