New regulations facilitate retail investor participation in the Singapore bond market.
On May 19, the Monetary Authority of Singapore (MAS) promulgated two new regulations, effective immediately, to facilitate retail investor participation in the Singapore bond market.
The first regulation[1] allows for the resale—six months after their initial issuance—of eligible bonds of eligible issuers to retail investors using just a product highlight sheet (Bond Seasoning Framework). It would also be possible at that same time to redenominate the seasoned bonds into smaller denominations of as little as S$1,000 and to re-open the issue to issue additional new bonds of the same series to such retail investors.
The second regulation[2] allows for the initial issuance of eligible bonds of eligible issuers directly to retail investors using a simplified disclosure document and a product highlight sheet (Exempt Bond Issuer Framework).
Prior to the new regulations, corporate bond offerings in Singapore to retail investors were not commonplace, owing to the requirement to prepare and lodge with the MAS a prospectus or, if a company was listed on the Singapore Exchange, an offer information statement—in each case containing certain prescribed content requiring significant time and effort to prepare. As a result, a substantial majority of Singapore corporate bond offerings were made only to institutional and accredited investors, in high denominations, and using an information memorandum that did not need to be lodged and registered with the MAS.
Expectations are high that the two frameworks will result in more choice for Singapore retail investors.
Check out the next issue of the Morgan Lewis Asia Chronicle for an in-depth article on the Bond Seasoning Framework and the Exempt Bond Issuer Framework.
[1] Securities and Futures (Offers of Investments) (Exemption for Offers of Post-Seasoning Debentures) Regulations 2016.
[2] Securities and Futures (Offers of Investments) (Exemption for Offers of Straight Debentures) Regulations 2016.
