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Monday, 17 December 2018

Singapore Bond House

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DBS cemented its pole position in Singapore in 2017 with a concerted effort to deepen the domestic bond market, bringing both issuers and investors back to the market after a rocky period in recent years.

As Singapore’s largest bank, DBS has a formidable reputation to maintain. Rather than shy away from the challenge, it kept up a brisk pace, grabbing the lion’s share of the local market with S$6.7bn (US$5bn) of bonds to its credit in the period under review, a 36.8% market share.

DBS worked hard to restore confidence in its home market following a turbulent 2016, with restructuring exercises still piling up in the offshore oil services industry.

The bank met investors’ growing appetite for high-yielding products with longer-dated or subordinated offerings from investment-grade names. These products helped lure private bank clients, many of whom had been burned by losses on defaulted oil and gas-related bonds, back into the market.

Yield-focused investors welcomed perpetual issues from the likes of Mapletree Investments and Hotel Properties, eventually clearing the way for a total of 14 Singapore dollar corporate perpetual issues in 2017.

DBS also played a leading role in deepening the domestic market by developing Green bonds.

As sole lead, it brought Singapore’s first Green bond to the market in April. City Developments’ S$100m 1.98% two-year issue helped refinance the refurbishment of Republic Plaza, which won the highest possible environmental rating from Singapore’s Building and Construction Authority.

The Singapore bank then showcased its own sustainability credentials with a US$500m five-year Green bond in July, which will fund environmentally friendly projects or assets.

The two deals confirmed the growth of the Asian investor base for Green bonds, and helped convince Canada’s Manulife Financial to choose DBS as a lead bookrunner on its first Green issue in the Singapore dollar market. The S$500m 3% Tier 2 issue, sold on November 14, also became the world’s first Green bond from a life insurance company, and underlined DBS’s ability to bring high-profile foreign issuers to Singapore dollars.

Its strengths in the FIG sector were again in evidence when HSBC hired it as lead manager along with UOB for the British bank’s S$1bn Additional Tier 1 offering in June, the first from a global systemically important bank in the currency.

DBS also brought major foreign borrowers to the Singapore dollar market, such as China Huarong Asset Management, which sold bonds twice in 2017, and introduced new credits such as CNQC International Holdings. Its strong local relationships were also key to winning repeat business from local issuers such as Mapletree, Wing Tai Holdings and Singapore Airlines.

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