Wholesale bonds from SGX open

Wholesale bonds from SGX open

The SGX, or the Singapore Exchange, is one of the main equity and derivative marketplace in south-east Asia, and many of the leading companies of Singapore use it as a primary marketplace.

It was created when the Singapore International Monetary Exchanges merged with the Stock Exchange of Singapore, and it is a crucial part of various benchmark indexes.

The SGX has recently added the MSCI China Free Index to its list of offers, and as a result, it has become a better representation of how broad equity markets are. This was part of its campaign to increase the variety of services it provides.

Retail investors in Singapore can now invest in wholesale bonds, which is something they were not able to do before, and it is all thanks to the SGX's brand-new bond seasoning framework.

This means that retail investors are now able to purchase wholesale bonds, six months after the SGX lists them, from as little as $1000.

Issuers can offer these bonds if they adhere to criteria which are connected to their listing history, track record, as well as their size. At the moment, the local bourse has 1 900 wholesale bonds, which are offered to accredited investors and institutions, and they are only available in denominations of at least $200 000.

Eligible issuers can also make use of "re-taps", which is what subsequent direct offers of bonds are called, in order to offer wholesale bonds to retail investors. They can do this without a prospectus and under the same terms as existing wholesale bonds, after the seasoning period of six months. This modification followed on the public consultations that SGX had made in 2014.

The Monetary Authority of Singapore has also announced an Exempt Bond Issuer Framework on top of the Seasoning Framework.

Issuers who comply with thresholds that are connected to their track record and which are more than the Seasoning's Framework's eligibility criteria can directly offer bonds to retail investors as soon as they are available, without prospectuses.

In order to be eligible, issuers need to have a market capitalisation exceeding S$1 billion across 180 market days, or, in the most recent audited annual financial statements and, as an average across the last three years, they should have a net asset exceeding S$ 500 million. Furthermore, they should have equity securities which have been listed on SGX or another securities exchange which has been recognized, over five years, and they should have listed bonds on SGX for five years.

Eligible issuers must also have, on average, a net profit of at least S$100 million, and a positive net operating cash flow, and a credit rating of AA- or higher. The bonds they offer should also have an AA- or higher credit rating. Furthermore, they have to have guaranteed the issuance of bonds that SGX lists for five years.

If bonds are offered through a re-tap, the initial offer size has to be at least S$150 million initially and they have to be listed as well as traded with on SGX, and cannot be larger than 50% of how much had originally been offered to specific investors, and retail investors have to be given a PHS if bonds will be re-denominated as well as when they become available for secondary trading.

The CEO of SGX, Loh Boon Chye, stated that there is a large amount of interest from retail investors regarding income investments which are fixed, and this will provide a wider variety of products related to fixed income. Furthermore, a larger group of investors is beneficial to issuers, and this campaign will advance the SGX's attempts to create a thriving as well as dynamic market regarding fixed income in the country.