Pickier investors, reluctant borrowers could dampen Singapore’s debt capital market

A RISING interest rate environment, global macro worries and geopolitical tensions may hinder corporates from raising funds in Singapore’s debt capital market (DCM) next year. Companies are expected to hang back from paying more to investors seeking higher yields, said market experts.

“Corporates exploring raising debt are sensitive to locking-in and assuming the burden of higher rates, while returns are becoming more uncertain owing to an uncertain business outlook in the short term,” said Ernst & Young corporate finance chief executive Mah Kah Loon.

Such an environment could, in turn, translate to a “flight to quality” as investors seek investment grade credits with a bias towards shorter maturities, bonds with higher yields, and possibly floating rate debt, he continued.