SGX & MAS propose greater retail access to bonds
http://www.automatedtrader.net/news/at/151416/sgx-proposes-greater-retail-access-to-bonds
http://www.mas.gov.sg/~/media/MAS/N...tating Bond Offerings to Retail Investors.pdf
Proposed:
- First, retail investors can purchase SGX-listed wholesale bonds initially denominated in S$200,000 or above in smaller lot size six months after their listing ("seasoned bonds").
- Second, SGX proposes to allow issuers to make subsequent offers of new bonds on the same terms as the seasoned bonds to retail investors directly. SGX proposes to apply the regulatory framework only to plain vanilla bonds with an initial minimum principal amount of S$300 million and a maximum tenure of 10 years. Safeguards in the form of qualifying criteria for issuers and disclosure requirements underpin the proposed framework.
Plain vanilla bonds under the proposals refer to those which:
(i) have a fixed term not exceeding 10 years;
(ii) provide for repayment of the principal sum at the end of the fixed term;
(iii) have periodic interest payments which cannot be deferred;
(iv) carry a fixed interest rate or floating rate of interest comprised of a reference rate plus a fixed margin which cannot be decreased;
(v) are not convertible into or exchangeable for other securities;
(vi) are not asset-backed securities or structured notes; and
(vii) are unsubordinated.
The scope excludes convertible bonds, perpetual bonds, and other hybrid instruments
MAS proposes that an issuer (or a guarantor in the case of a guaranteed issuance of bonds by its wholly-owned entity) should meet the following eligibility criteria in order to be an Exempt Bond Issuer:
(a) Size Test under the Seasoning Framework;
(b) Listing Test under the Seasoning Framework; and
(c) Credit Test:
(i) Has a credit rating of AA- or higher, or the bonds to be offered are rated AA- or higher, where the rating is done by an international credit rating agency; or
(ii) Has issued, or guaranteed the issuance of, bonds listed on SGX of at least S$1 billion (or its equivalent in foreign currency) over the previous 5 years.