Total outstanding debt arranged by Singapore FIs down by 2% y-o-y to $512 bil in 2022

This comes amid an overall decrease in the volume of global bond issuances, according to an MAS report.

The total outstanding debt arranged by financial institutions (FIs) in Singapore fell by 2% y-o-y to $512 billion as at Dec 31, 2022, down from $523 billion in 2021, says the Monetary Authority of Singapore (MAS).

This comes amid an overall decrease in the volume of global bond issuances, added the central bank in its Singapore corporate debt market development 2023 report. The lower volume was attributed to an acceleration in rate hikes to rein in inflation.

In 2022, new debt issuances by Singapore FIs also fell by 18% y-o-y to $190 billion. Amid the total number of issuances, the US dollar (USD) remained the primary currency while the Singapore dollar (SGD) and the Australian dollar (AUD) gained in the denomination of choice.

During the same period, FIs emerged as the key issuers in both SGD and non-SGD issuances due to banks’ funding activity to strengthen their capital buffers before any further tightening from the US Federal Reserve.

On the other hand, issuances from corporate issuers were halved in 2022 as corporates with strong balance sheets cut back on fundraising efforts amidst greater bond market volatility and higher interest rates.

SGD-denominated issuances from Singapore’s statutory boards remained strong, covering 28.1% of the total issuances in 2022. The Housing & Development Board (HDB), the National Environment Agency (NEA) and the PUB raised a total of $8.2 billion during the same year, of which half were raised as green bonds.

Green bond issuances from the public sector grew by 2.5 times y-o-y.

At the same time, SGD-denominated issuances from FIs also increased as FIs built up capital buffers.

In 2022, FIs made up 83.9% of the non-SGD issuances, up by 19 percentage points y-o-y, as they continued to tap onto Singapore’s multicurrency bond market and raised funds in USD, AUD, Chinese yuan (CNY), Hong Kong dollar (HKD) and Euro (EUR). The multicurrency fund issuances were due to expectations that funding costs were likely to rise further in the near-term. At the same time, corporate issuances fell by 14.1 percentage points y-o-y to 10.8% of Singapore’s total non-SGD issuances in 2022.

The issuance of green, social, sustainability, sustainability-linked and transition bonds (GSS+) fell by 29.9% y-o-y to $10.1 billion in 2022, down from $14.4 billion in 2021. The drop was attributed to the more challenging market environment for bond activity, although 2022’s sum, which was higher than the total issuance volume in 2019 and 2020 put together, signals a continuing mainstreaming of GSS+ bonds.

In 2022, the Singapore government issued its inaugural 50-year sovereign SGD green bond that raised $2.4 billion. HDB and NEA also raised over $4 billion from green bonds over the same period.

“Public sector green bond issuances are a key part of Singapore’s overall sustainability strategy, and build on MAS’s efforts to develop Singapore as a green finance hub in Asia. These issuances spur the development of a high quality green bond market in Singapore by serving as a reference for the corporate green bond market, deepening market liquidity for green bonds, attracting green issuers, capital, and investors,” reads the report.

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