- Another stellar month for SGX bond market with 51 new bonds listed and S$21.1 billion raised in July 2014.
- Increasing number of bond listings by Japanese companies driven by favorable market conditions due to effects of Abenomics.
- More debut bond listings on SGX reflect strong investors’ demand and growing importance of the Asian bond market.
SGX bond market continued to perform strongly with 51 new bonds listed and S$21.1 billion raised in July 2014. This brings the total number of bonds listed year to date to 310 with total proceeds of S$133.4 billion, a 23% increase compared to 252 bonds listed and 16% increase compared to S$114.7 billion raised in same period last year.
Highlights
Increasing number of bond listings by Japanese companies
A recent trend observed is the increasing number of bond listings by Japanese companies, which rose by about 19% in the first seven months of 2014 compared to the same period in 2013. The 32 bonds listed by Japanese companies year to date raised a total of S$26.2 billion, an increase of approximately 30% compared to the same period last year. Bonds by Japanese issuers now account for 10% of total bond listings on SGX (compared to 9.5% for whole of 2013). The average issuance size of bonds issued by Japanese companies has also almost doubled compared to last year.
In July itself, there was a massive four-tranche bond issuance by Sumitomo Mitsui Banking Corporation. The bank raised US$3 billion over three fixed rate tranche and one floating rate tranche. Most of the bond issuances by Japanese corporates are convertible bonds in nature while Japanese banks generally issue fixed or floating rate bonds.
The expected positive impact from Abenomics could be driving increased debt issuances by Japanese issuers. Japan’s real GDP has grown more than 2% over the past 3 quarters and encouraging economic prospects are likely spurring capital spending, and hence increased interest in the debt capital market. Furthermore, with the current low interest rate environment, as well as possibility of overcoming deflation and stock market recovery as a result of Abenomics, market conditions bode well for Japanese lenders seeking to optimise financing options in bonds or convertibles amidst healthy investor appetites.
Debut bond listings
The market has seen many debut bond listings recently. There were 26 debut bond issuers year to date while 47 debut bond listings were recorded in 2013. It is also noteworthy that of the 47 debut bond listings in 2013, 12 of the issuers have since successfully returned to the bond market for further fund raising. As the leading listing venue in Asia Pacific, SGX has also seen debut bond listings from issuers in Southeast Asia, Asia Pacific and as far as Switzerland and Brazil. Despite interest rates remaining low in general, there is still strong investor appetite for bonds as investment products.
In the month of July alone, Koh Brothers Group Limited, Pacific International Lines (Private) Limited, Tiong Seng Holdings Limited, Companhia Brasileira De Aluminio, Geo Energy Resources Limited and Seven and Seven Limited have successfully listed their first bonds on SGX.
The growing number of new issuers and increased investors’ participation have added much depth and dynamism to the Asian bond market, which has experienced exponential growth since the Asian financial crisis. These developments will continue to shape and enrich the landscape of the Asian bond market.
SGX Fixed Income
SGX's fixed income market is organised into two main segments: the retail bond market and the wholesale bond market. SGX-listed retail bonds are offered to the public and traded on the exchange's Mainboard in much the same way stocks are. SGX-listed wholesale bonds are only distributed to institutional or accredited investors in larger denominations and are primarily traded over-the-counter. More information on SGX-listed debt securities can be found here.
Debt Securities (with ≥ US$750 million issue size) listed on SGX in July 2014:
No. |
Issuer |
Amount Issued |
Description |
Listing Date |
1 |
Republic of Indonesia |
EUR 1,000,000,000 |
2.875% Notes due 2021 |
9-Jul-14 |
2 |
Sumitomo Mitsui Banking Corporation |
USD 1,000,000,000 |
1.35% Senior Fixed Rate Notes due 2017 |
14-Jul-14 |
3 |
Sumitomo Mitsui Banking Corporation |
USD 1,000,000,000 |
2.25% Senior Fixed Rate Notes due 2019 |
14-Jul-14 |
4 |
DBS Group Holdings Ltd |
USD 750,000,000 |
2.246% Notes due 2019 |
17-Jul-14 |
5 |
Ongc Videsh Limited |
USD 750,000,000 |
3.25% Guaranteed Notes Due 2019 |
17-Jul-14 |
6 |
Ongc Videsh Limited |
USD 750,000,000 |
4.625% Guaranteed Notes Due 2024 |
17-Jul-14 |
7 |
Cimpor Financial Operations B.V. |
USD 750,000,000 |
5.75% Senior Notes Due 2024 |
23-Jul-14 |