New 20-Year SGS to Further Develop Singapore's Debt Market
Singapore, 12 October 2006...The Singapore Government will issue for the first time, a 20-year Singapore Government Securities (SGS) bond in March 2007. This was outlined in the latest SGS issuance calendar released today. Currently, the 15-year SGS is the longest maturity bond that the Government started issuing in 2001. The issue of the 20-year bond is part of the Government and MAS' efforts to develop the Singapore debt market.
2 "The extension of the benchmark yield curve will facilitate pricing of long-dated securities such as infrastructure project bonds. This will complement the tax incentives for developing project financing announced last month. Longer-dated products will also help insurance companies to better manage their risks and offer annuity and other retirement planning products," said Mr. Tharman Shanmugaratnam, Minister for Education and Second Minister for Finance.
3 SGS bonds are usually sold via auctions through MAS-appointed SGS Primary Dealers who are obliged to tender for an equal share of the issue on offer. To further broaden the investor base of SGS, MAS, in consultation with market participants, is currently assessing the merits of using alternative channels for issuing the 20-year bond, such as through a direct sales mechanism, via a lead manager(s).
Note to Editor:
i) In 1998, MAS embarked on developing the Singapore dollar (S$) debt market as an alternative source of financing to bank loans. The Singapore Government Securities (SGS) market was developed to act as a price-discovery mechanism and liquid hedging instrument for the broader debt market. The SGS yield curve was extended to 15 years in 2001 and will be further extended to 20 years in 2007. Trading activities and transparency in the SGS market were enhanced with the launch of SGS E-bond Trading Platform. The platform publishes both pre and post trade prices. This will encourage more investors to participate in the market. MAS is also considering a central lending facility for S$ bonds and a new SGS bond futures contract.
ii) Since 1998, the S$ debt market has almost quadrupled to S$148bn. Singapore is the only Asian bond market outside Japan to be represented in three global bond indices, namely, the Citigroup World Government Bond Index (WGBI), the Lehman Brothers Global Aggregate Index and the JP Morgan's World Government Bond Index. It is also one of the most international debt markets in Asia. Issuance by foreign entities accounts for 20% of the market.