Total debt issued in Singapore soared 39% to $259b in 2017

SGD debt hit a 5-year high at $27b due to strong sentiment.

Corporate debt issuance in Singapore grew by 39% to $259b in 2017 from $186b last year due to debt issued in both Singapore dollar (SGD) and non-SGD denominated debt securities, the Monetary Authority of Singapore’s (MAS) revealed.

According to a report, SGD debt securities issued reached a five-year high of $27b, catalysed by strong investor sentiment and issuers seeking to secure longer-term funding ahead of the expected rate increases.

MAS noted that a multitude of Asian corporations tapped Singapore’s bond market for billion-dollar non-SGD denominated issuances. “PT Paiton Energy, Indonesia’s second largest power producer, raised US$2b for its amortising project bond. Marking the return of project bonds in Asia after nearly two decades, this issuance was also the first investment-grade bond for an infrastructure project in the region,” it said.

In line with higher issuance volumes, total debt outstanding grew 19% YoY to $386b, representing a CAGR of 9.1% since 2013. SGD debt outstanding reached $150b whilst non-SGD debt outstanding was $236b.

Volumes across all maturities in the SGD segment were higher in 2017 as compared to 2016. “However, longer-term (>5 year) SGD corporate debt securities experienced a larger increase in issuance volumes, buoyed by multiple benchmark-sized issuances by local corporations,” MAS added.

For the non-SGD corporate debt market, whilst most maturities saw higher issuances in 2017 compared to 2016, shorter-term (one to five years) non-SGD corporate debt securities surged nearly two-fold, reflecting investors’ preference to hold shorter tenure bonds.

Consistent with prior years, corporate issuers accounted for the majority of issuance volumes, at 24% and 23.6% for non-property and property corporations respectively. Financial institutions (FI) brought 19.5% of issuance volumes to market, lower than the 27.7% in 2016.

Other categories of issuers included special purpose vehicles (18.3%), government agencies and statutory boards (12.1%), and supranational (2.5%). The Housing & Development Board (HDB) was the largest issuer with $3.32b in issuances in 2017.

In the non-SGD corporate debt market, FIs accounted for the majority of issuance volumes, at 81.2%. Amongst non-FIs, corporations (excluding property) formed the largest segment. Non-SGD debt issuance accounted for 89.4% ($232b) of total debt issuances in 2017.

USD remained the primary currency of issuance, accounting for around three-quarters of total issuance volumes in 2017, similar to that in 2016 Following the USD, the SGD remains the second largest currency, with a share of 10.6%.

Repeat issuances also brought in issuance volumes, contributing well over 80% of total issuance volumes in 2017. Volumes from first-time issuances registered a whopping three-fold increase in 2017, compared to a 32% increase in volume for repeat issuances.

The number of first-time issuers increased from 37 in 2016 to 63 in 2017, a reversal of the declining trend observed in the last few years. Likewise, the number of repeat issuers rose from 85 in 2016 to 103 in 2017.

FIs continued to be significant participants in money markets here, taking up more than 65% of all short-term issues. Fund managers and insurance companies took up 40% of long-term issues, supporting the strong and diverse investor base in this segment.

Fund managers and private banks accounted for over half of the investment demand in SGD debt, with demand from private banking clients overtaking fund managers in 2017. Lastly, FIs and fund managers remain the dominant investors in non-SGD debt, holding preferences in USD, GBP, and EUR.