Singapore’s Debt Issuance Stood at $421.15 billion in 2023

The total outstanding debt arranged by financial institutions stood at $421.15 billion, registering a 10.5% y-o-y in 2023 notwithstanding the high interest rates coupled with financing needs from multinational enterprises (MNEs) in Singapore.

On the other hand, global bond issuance volume remained flat at $6.6 trillion in 2023, amidst the peaking interest rates environment and an expectation of an economic slowdown.

In its annual Singapore Corporate Debt Market Development 2024, the Monetary Authority of Singapore (MAS) said that the new issuances rose 21% y-o-y to $230 billion in 2023. Singapore dollar-denominated bonds and US dollar-denominated bonds remained the main currencies for issuances, the report said.

The financial institutions also issued an additional $13 billion bonds y-o-y last year, with a corresponding 31.8 percentage point increase in the proportion of Singapore dollar issuances by financial institutions compared with the previous year.

This was due to local banks’ increased interest and capacity amid stronger earnings from their lending businesses. Together with issuance from corporations, this has offset the $7.4 billion y-o-y decline in statutory board issuance.

MAS said that this was driven by an increase in issuance volumes from global corporations such as Pfizer Investment Enterprises in Singapore, which announced a $31 billion multi-tranche issue in the first half of 2023.

“Financial institutions continued to tap into our multi-currency bond market and raised funding in various currencies such as US dollar, Australian dollar, pound sterling, Hong Kong dollar and euro, to support their business needs,” MAS explained.

Strong Fund Raising Centre

Singapore remained a strong fund-raising centre due to its bond market which is fully accessible to all issuers and investors as there are no capital controls, hedging restrictions or withholding taxes, MAS said.

“This flexibility along with the increasing maturity of the debt market have allowed issuers in and outside Singapore to raise funds through our capital markets to support their operations and expansion,” MAS said.

According to MAS, Singapore also serves as the Global-Asian asset and wealth management hub and many asset managers have set up regional HQs in Singapore to be closer to Asia’s deal making opportunities.

Another reason for the growth of debt capital in the country has been that Singapore houses over 40 international and regional banks’ debt capital markets teams. They were supported by professional services providers such as international lawyers, accountants, rating agencies and ESG-related second party opinion providers that provide essential ancillary services and overall speed to issuance.

In Asia, issuance volume of Asia excluding Japan, G-3 bonds declined by 16.5% y-o-y to $160 billion, as Asian corporates reined in financing on the back of higher funding costs.

Against this backdrop, Singapore’s bond market fared well, with issuance volumes rebounding 59% in 2023 to reach $77 billion, driven by financing needs of global corporates based in Singapore to fund their operations and expansion in Asia, MAS said.

The recent trends and transactions observed by MAS include Chinese offshore issuances such as CNH denominated issuances from Guangzhou Development District Holding Group Limited, Xi’an Kingfar International and AVIC International Leasing Co., Ltd., raised more than $520.86 million in total.

In 2024, MAS welcomed the first sustainability linked panda bond from CapitaLand Investment that raised $140 million from investors.

The panda bond issued by a Singapore company and garnered strong demand from Singapore-based foreign issuers who also tapped the city-state’s corporate bond market to fund their business expansion both domestically and globally.