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Source:
www.mas.gov.sg |
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New 20-Year SGS to Further
Develop Singapore's Debt Market |
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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 (12 Oct 2006). |
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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. |
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"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. |
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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. |
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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). |
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Notes: |
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i) In 1998, MAS embarked on developing the
Singapore dollar (S$) debt market as an alternative source of financing
to bank loans. |
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The Singapore Government Securities (SGS)
market was developed to act as a price-discovery mechanism and
liquid hedging instrument for the broader debt market. |
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The SGS yield curve was extended to 15
years in 2001 and will be further extended to 20 years in 2007. |
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Trading activities and transparency in
the SGS market were enhanced with the launch of SGS E-bond Trading
Platform. The platform publishes both pre and post trade prices.
This will encourage more investors to participate in the market.
MAS is also considering a central lending facility for S$ bonds
and a new SGS bond futures contract. |
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ii) Since 1998, the S$ debt market has
almost quadrupled to S$148bn. |
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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. |
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It is also one of the most
international debt markets in Asia. Issuance by foreign entities
accounts for 20% of the market. |
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Source:
www.mas.gov.sg Press Release
12 Oct 2006 |
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FrontPage Edition: Mon 16 October 2006
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