Singapore companies tap local and offshore bond markets; issuance up 20% in 2016

SINGAPORE companies' debt issuance reached US$24.7 billion so far this year, a 19.6 per cent increase over 2015, as they tapped both domestic and offshore bond markets to raise funds.

This is the highest-ever for Singapore bond offerings since 2012 (US$30.8 billion), said Thomson Reuters on Wednesday.

But issuance had its third consecutive quarterly decline during the fourth quarter of 2016 with US$1.5 billion, slipping down from the US$7.0 billion in the third quarter of 2016, US$7.7 billion in the second quarter of 2016 and US$8.5 billion during the first quarter of 2016.

Longer bond tenures of 10 years and up were popular, raising a total of US$11.8 billion, up 68.5 per cent from 2015.

Singapore issuers tapped the US-dollar bond market and raised US$7.4 billion, a 15.5 per cent increase from last year. At least 70 per cent of the US-dollar bonds issued by Singapore companies had a long-term maturity of 10 years or higher. United Overseas Bank (UOB) was the most active issuer, raising a total US$1.4 billion from four US$-denominated bonds.

Euro-denominated bonds issued by Singapore companies reached US$3.9 billion, a significant increase compared to US$634.6 million in 2015. These include Temasek's euro debut with US$1.2 billion (1.1 billion euros) and UOB's US$541.7 million (498.3 million euros) first euro covered bond.

DBS Bank leads the Singapore-issued bonds underwriting this year with US$5 billion, up 4.8 per cent over a year ago, and accounts for 20.2 per cent market share. OCBC Bank and HSBC rounded out the top three with 7.2 per cent and 6.3 per cent market share, respectively.

According to estimates from Thomson Reuters/Freeman Consulting Co, DBS Group booked an estimated US$17.8 million in fee revenues, and accounted for 15.3 per cent of Singapore's bond fee pool. Imputed underwriting fees from bond issuance by Singaporean companies totalled US$116.7 million, up 84.4 per cent from the same period last year.

The financial sector raised US$14.4 billion, a 39.4 per cent increase compared to last year and accounted for 58.1 per cent market share. Government and agencies represented 20.4 per cent of the market share, raising US$5 billion, followed by the industrials sector with 8 per cent market share worth US$2 billion.

But the SGD bond market was slow with issuance the lowest since 2009.Singapore-dollar denominated (SGD) bond market slowed as the year approached to a close with fourth quarter 2016 issuance of S$1.9 billion (US$1.3 billion), a 40.3 per cent sequential decrease from the third quarter of 2016, and down 60.5 per cent from the fourth quarter of 2015.

This brought the SGD bond market issuance to S$17.5 billion (US$12.7 billion) so far this year, an 18.5 per cent decline from last year, and the lowest since 2009 (S$11.6 billion).

The financial sector accounted for 40.6 per cent of the SGD bond market and raised S$7.1 billion (US$5.2 billion). Government & agencies and real estate captured 31.6 per cent and 11.8 per cent market share, respectively.

Housing & Development Board (HDB) was the largest and most active SGD issuer this year. It began in January with a seven-year S$1 billion deal (US$698.0 million). HDB repeatedly returned to the SGD market and generated a cumulative total of least S$5.3 billion (US$3.8 billion) from seven bond offerings so far this year, compared to only one in 2015.