In the Midst of an Acquisition Push, the Singapore Exchange is Eyeing its First US Dollar Bond

Singapore Exchange Ltd., the city-main state’s stock exchange, has hired banks to help it launch its first dollar bond offering as part of a strategy to diversify its revenue away from stocks through acquisitions.

According to a source familiar with the situation who asked not to be identified because they aren’t authorized to speak about it, SGX will host investor calls starting Tuesday regarding a prospective US dollar note.

The exchange’s net income for the fiscal year ended June 30 declined 6% from the previous year, owing in part to growing expenses. Through acquisitions, it has grown its fixed income, currency, and index operations. Costs will remain high as the company invests in expansion, according to Chief Financial Officer Ng Yao Loong, who spoke at an earnings event earlier this month.

Market data, connectivity, and indexes, as well as fixed income, currencies, and commodities, may drive Singapore Exchange’s revenue growth, which has been boosted by the acquisition of MaxxTrader and maybe additional M&A activity. Sharnie Wong, a Bloomberg Intelligence analyst, said in an August 10 note.

Image Source: Bloomberg

The bourse isn’t the only one looking to add to Asia’s growing supply of US currency bonds. China Merchants Bank Co. also hired banks in preparation for a possible sustainability and green note issue. On Tuesday, however, the primary market was quiet, with only one company promoting its deal.

According to Bloomberg-compiled data, borrowers have sold more than US$254 billion in dollar bonds in Asia excluding Japan this year, on course to surpass last year’s record of US$346 billion. On Monday, yield premiums on investment-grade dollar notes in the region dipped below 126 basis points, a level last seen in February 2020.

Asia

On Tuesday, the primary dollar bond market was quiet, with only one offering being offered by ABC International Holdings Ltd. Investors are waiting for the Jackson Hole symposium later this week, which could provide insight into how the Federal Reserve plans to decrease bond purchases.

  • Among non-dollar deals, UOL Group Ltd. is looking to price a seven-year debt offering in Singapore dollars
  • Spreads on high-grade dollar bonds from Asia excluding Japan narrowed by about 1 basis point, according to credit traders, putting them on pace for a seventh straight day of tightening
  • The Markit iTraxx Asia ex-Japan CDS index of high-grade notes dropped 0.5 basis point, according to credit default swap traders. The gauge is poised for a fifth straight day of decline, CMA data show
  • Sentiment was last week bolstered by a government-backed bailout of China Huarong Asset Management Co. Still, the rescue plan is prompting divergent views among Moody’s Investors Service and Fitch Ratings.

U.S.

New issue sales of U.S. CLOs have set a monthly record of approximately US$16.6 billion, according to data compiled by Bloomberg News.

  • U.S. government agencies including the Treasury, Federal Reserve and Securities and Exchange Commission are concerned by reports that non-financial corporates aren’t being offered loans linked to Libor alternatives
  • For deal updates, click here for the New Issue Monitor
  • For more, click here for the Credit Daybook Americas
Image Source: Financial Times

Europe

Rock-bottom borrowing costs have put Europe’s lenders on track to redeem all of their eligible junior bonds known as Additional Tier 1 this year.

  • Just one of the 19 riskiest bonds with a first call option in 2021 is yet to be retired after Austrian lender Erste Group Bank AG said this week it will call an AT1 at the first opportunity in October
  • A proposed European Union standard for green bonds that’s designed to align investment with the bloc’s climate goals probably will fall flat without additional incentives for issuers, according to SEB AB, which pioneered the instruments
  • Swedish property company Hufvudstaden is considering issuing its first ever green bond, CFO Asa Roslund says

Source: Yahoo News

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