Total outstanding debt arranged by financial institutions in Singapore down 2% in 2022: MAS

SINGAPORE – The total outstanding debt arranged by financial institutions in Singapore stood at $512 billion at the end of 2022, down 2 per cent compared to $523 billion in 2021 as major central banks raised interest rates to rein in inflation.

New debt issuances tumbled 18 per cent to $190 billion in 2022 from $232 billion in 2021, according to the Singapore Corporate Debt Market Development Report 2023 released by the Monetary Authority of Singapore (MAS) on Monday.

In Asia excluding Japan, the issuance volume of G-3 bonds – which represent bonds denominated in US dollars, yen, or euros – halved to US$192 billion (S$263 billion) from US$391 billion in 2021.

The US dollar was the most favoured currency for corporate debt issuances in Singapore last year, accounting for 73.4 per cent of the currency denominations.

This was followed by the Singapore dollar at 15.3 per cent, the Euro and Hong Kong dollar at 2.6 per cent and the Aussie dollar at 2.5 per cent.

Financial institutions were the key issuers last year. This was driven by banks’ funding activity to strengthen capital buffers in anticipation of further interest rate hikes by the United States Federal Reserve. 

Their share of Singapore dollar issuances stood at 44.3 per cent. Statutory Boards accounted for 28.1 per cent of the share of Singapore-dollar issuances, corporates excluding properties and special purpose vehicles 10.7 per cent each, and property firms 6.2 per cent.

Financial institutions accounted for 83.9 per cent of the non-Singapore dollar issuances. Corporations excluding property comprised 10.8 per cent, special purpose vehicles 4.7 per cent, supranational 0.3 per cent and property 0.3 per cent.

“Financial institutions continued to tap into our multi currency bond market and raised funding in various currencies such as the US dollar, Aussie dollar, yuan, Hong Kong dollar and Euro in anticipation that funding costs were likely to rise further in the near term,” the MAS said. 

On the other hand, the number of corporate issuers halved in 2022 as those with strong balance sheets cut back on fundraising efforts as borrowing costs increased.

Issuance of green, social, sustainability, sustainability-linked and transition bonds (GSS+) in Singapore fell to $10.1 billion in 2022 from $14.4 billion in 2021. However, this remained higher than the $8.6 billion worth of issuances for 2019 and 2020 combined, signalling “a continuing mainstreaming” of GSS+ bonds, the MAS said.

Last year, the Housing & Development Board, National Environment Agency and national water agency PUB raised a total of $8.2 billion, half of which were green bonds.