Encouraging credit ratings in the SGD bond market
Singapore, 30 June 2017… The Monetary Authority of Singapore (MAS) announced today that it has launched a Singapore-dollar (SGD) Credit Rating Grant to encourage issuers in the SGD bond market to issue rated bonds.
2. Investors today generally have access to publicly available information such as company financial statements and offering documents when they consider their bond investments. Greater availability of credit ratings in the domestic bond market will help to further improve market transparency, by providing timely and independent assessments of the credit worthiness of issuers throughout the life of a bond. Credit ratings can also benefit bond issuers. Many regular issuers in the SGD 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.
3. MAS would like to see a higher share of rated issuances in the SGD bond market. Currently, only about half of the outstanding volume of SGD bonds are rated . To encourage more issuers to obtain credit ratings, the SGD Credit Rating Grant will, over a five-year period, help issuers offset the associated costs. Qualifying issuers of SGD bonds who obtain credit ratings from an international credit rating agency (CRA) will be able to claim up to 100% 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. Interested issuers may contact MAS, the CRAs or any of the SGD bond arranging banks operating in Singapore for more information.
4. Jacqueline Loh, Deputy Managing Director, MAS said, “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 SGD bond market. 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.”
1 Data from Bloomberg.
2 This would cover the cost of issuer, programme and issue ratings from Fitch Group, Moody’s, and Standard & Poor (S&P). For each qualifying issuer, the SGD Credit Rating Grant can cover credit rating expenses from multiple issuances subject to the funding cap.