Singapore’s Bond Bonanza: Banks Are Swarming the City-State Like Bees to Nectar
Picture this: global banks, armed with fresh capital, are marching into Singapore’s debt market like a choir of eager students at their first class. The reason? Singapore’s quirky money rules have opened a sweet spot where borrowing feels as gentle as a sunny beach day. The result? The city‑state’s bond marketplace is poised for the biggest capital raise by banks in over a decade.
Why the Sudden Surge?
- Currency‑First Policy – Unlike the euro or yen, the Monetary Authority of Singapore pushes policy through the stubbornly steady Singapore dollar. That means the famous SORA (Singapore Overnight Rate Average) stays put even as US dollar rates simmer upward.
- Low Currency Risk – Investors find a Singapore dollar‑backed bond less spicy, lower risk, and easier to taste.
- Investor Appetite on Overdrive – Private banks are chomping at the bit, turning out lots of demand that made yesterday’s issuances go from “booked” to “sold out in a flash.”
Numbers That Pop
From the New Year to early July, Singapore’s debt market welcomed a staggering $12 billion (about $17 billion in local currency). That’s the largest haul of that quarter since 2019, with June alone pulling in the biggest value‑based issuances since September 2021.
Half of the $3.5 billion raised in June and a fifth of the year‑to‑date total were Tier‑2 notes—the kind banks use to pad their reserve capital. That’s the largest slice of Tier‑2 debt Singapore has seen in more than ten years.
Industry Voice
Daryl Ho of DBS Bank says the market is still well‑behaved—rates haven’t spiked like they’ve in bigger, wilder markets. “Naturally, you’ll attract a lot of issuers,” he mused over the city‑wide buzz.
Meanwhile, UOB’s bookrunner for a $900 million Tier‑2 note for HSBC in June reported that the offering was oversubscribed, with private banks chewing up the bulk of the purchases. The coupon was a competitive 5.25%, a whopping 20–25 basis points tighter than comparable notes issued in US dollars.
Barclay’s $450 million alternative Tier‑1 deal, just last week, crowed a 8.3% coupon. A week earlier, a $1.25 billion (£1.25 billion) issuance in Singapore dollars pulled 8.875%. Talk about a flavorful spread!
Market Outlook
Money‑market futures suggest that interest rates could climb to 3% by year’s end. Ken Wei Wong of Barclays points fingers at a “momentum” from the G3 currency dislocation, hinting that banks are watching Singapore like a keen detective at a crime scene.
OCBC’s Andrew Wong shakes his head in agreement: the Singapore dollar market looks cheaper than many others. As long as that price advantage sticks, financial institutions should keep raising capital in Singapore dollars.
In a nutshell:
- Singapore’s unique policy keeps borrowing cheap and currency risk low.
- Banks and private banks are buying up Tier‑2 notes like hotcakes.
- Bond yields are relatively low, making the city-state an attractive launch pad.
- Future interest rates might edge higher, but the Singapore dollar market remains the sweet spot.
