Singapore banks lukewarm on covered bonds

Abstract

Singapore banks will be in no hurry to issue covered bonds once they are approved by the Monetary Authority of Singapore (MAS) as they do not face immediate funding pressures due to their strong balance sheets, according to a senior figure at local firm. The MAS released a consultation paper on March 9 over whether locally incorporated banks could issue covered bonds. However due to the costs of setting up and maintaining a covered bond programme, combined with the initial low issuance cap of 2% of total assets, there may not be an initial scramble to issue these debt instruments, says Clifford Lee, head of fixed income for DBS Bank in Singapore.