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Singapore's first covered bonds could hit market by mid-2015: Fitch

Wednesday, February 4, 2015 - 17:53

THE Monetary Authority of Singapore (MAS) has further finetuned the guidelines for issuance of covered bonds, and the first covered bonds could hit the market as early as mid-2015.

Covered bonds are debt instruments secured by a pool of assets (cover pool) or where it's backed by cash flows from mortgages or loans. In Singapore, the MAS requires the cover pool to comprise primarily of residential mortgage loans, with a limited amount of cash and cash equivalents allowed, to minimise administrative burden on issuers.

Amendments proposed by the MAS to rules governing the issuance of covered bonds put Singapore one step closer to an active covered bond market, expected to open as early as mid-2-15, said Fitch Ratings on Wednesday.

The changes, detailed in an MAS consultation paper out last month, will provide greater flexibility to covered bond structures, said Fitch.

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"It further clarifies regulations including how assets can be segregated, the limit on liquid assets, and the calculation of the loan-to-value ratio for mortgage assets," it said.

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