Local bond market headed for another buoyant year

Local bond market headed for another buoyant year
Mr Henning: Genting's two perpetual bond issues - of $1.8b and $500m - are sizeable by any measure and have proven investors' acceptance for long dated subordinated debt instruments.

SINGAPORE - For the local bond market, 2013 is expected to be just as buoyant as the year gone by.

It will be the main draw for investors looking for yield and probably see more lower-rated companies and foreign issuers emerge.

But it's less certain whether one of the themes of 2012 - the popularity of the more risky perpetuals which fizzled out by the third quarter - will be repeated.

Perpetual securities have no maturity date and are more risky over plain vanilla bonds.

With 2012 almost over, total SGD bond issuance jumped to over $31 billion. This is almost 50 per cent higher than that for 2011 and nearly five times more than a decade ago.

Perpetual bonds issuance saw an impressive 200 per cent plus increase.

Gaming operator Genting tapped the market with a $1.8 billion perpetual bond issue at a coupon rate of 5.125 per cent in March 2012. The following month Genting issued another $500 million perpetual bonds at the same coupon, targeting retail investors.

"These are sizeable issuances by any measure and have proven investors' acceptance for long dated subordinated debt instruments," said Bryan Henning, Barclays head of research and investments.

Perpetuals or not, bankers are expecting a busy 2013 as the low interest rate climate will spur corporates to sell more debt.

"The drivers -low rates, manageable inflation, robust liquidity - are expected to continue to power buoyant primary activity in the first half of 2013," said Tan Kee Phong, Standard Chartered Bank Singapore director and head, capital markets.

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