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Singapore Exchange (SGX) is increasing the range of bonds available to retail investors with the introduction of the bond seasoning framework effective today.
The framework will enable retail investors to buy wholesale bonds initially offered to institutions and accredited investors, in denominations as small as S$1,000 six months after the bonds are listed on SGX. These bonds will be offered by issuers which meet minimum criteria relating to their size, track record and listing history. SGX currently lists 1,900 wholesale bonds which are only available in large denominations of at least S$200,000, and/or offered to institutions or accredited investors.
In addition, these eligible issuers can make subsequent direct offers of bonds, called a “re-tap”, to retail investors under the same terms as the existing wholesale bonds without a prospectus, following the six-month seasoning period. These changes follow SGX’s public consultations in September and December 2014.
In addition to the Seasoning Framework, the Monetary Authority of Singapore (MAS) also announced the Exempt Bond Issuer Framework today. Under this framework, issuers that satisfy thresholds relating to their track record that are higher than the eligibility criteria under the Seasoning Framework can offer bonds directly to retail investors at the onset without a prospectus.
Issuers under both frameworks must meet the requirements under regulations introduced today by the MAS, which can be found at www.mas.gov.sg as well as the SGX listing rules, which can be found at www.sgx.com.
Bonds issued to retail investors under both frameworks can be bought and sold via SGX.
Loh Boon Chye, CEO of SGX said, “Retail investors are greatly interested in fixed income investments. The frameworks will widen the range of fixed income products and enable retail investors to access some of the 1,900 wholesale bonds listed on SGX, Asia’s leading bond-listing platform. Issuers too will gain from a bigger pool of investors. This initiative advances SGX’s efforts to build a dynamic and thriving fixed income market in Singapore.”
SGX also issued today its response to the public’s feedback to the consultation paper in December 2014 on proposed amendments to the listing rules relating to trustee and trust deed requirements for retail bonds. The response can be viewed www.sgx.com.
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Annex A
An issuer that issues bonds under the Seasoning Framework must meet at least one criterion under each of the following three tests at the time of its application for listing of their bonds, prior to making the bonds available for trading by retail investors and at the time of a re-tap.
Test 1
- Market capitalisation of at least S$1 billion over the past 180 market days; or
- Net asset of at least S$500 million in the most recent audited annual financial statements as well as an annual average net asset of at least S$500 million over the 3 most recent audited annual financial statements.
Test 2
- Has equity securities listed on SGX or a recognised securities exchange for at least 5 years; or
- Has listed, or guaranteed the issuance of, bonds listed on SGX for at least 5 years.
Test 3
a. Has not recorded on average a net loss and has on average a positive net operating cash flow for the 3 most recent audited annual financial statements; or
b. Has a credit rating of BBB or higher, or the bonds to be offered are rated BBB or higher, where the rating is done by an international credit rating agency; or
c. Has listed, or guaranteed the issuance of, bonds listed on SGX of at least S$500 million (or its equivalent in foreign currencies) over the previous 5 years.
Full details of the eligibility criteria can be found at www.mas.gov.sg.
