Rise in sub-debt issuance raises questions for Singapore corporates

Singapore''s corporate bond market has gone quiet with investors showing a preference for bank sub-debt.
Following an excellent first half of the year in the Singapore corporate bond market, with many borrowers taking the opportunity to issue in a favorable environment of low interest rates, the market seems to have dried up temporarily.

The dearth of issuance cannot be explained by the cost of issuing bonds increasing in recent months interest rates remain low certainly low enough to encourage corporates to hit the market.

Instead, the situation is more a result of two demand-related trends. Firstly, the recent growth in the amount of subordinated debt issued by banks offers investors attractive yields relative to that of corporate bonds and, secondly, there is growing evidence that suggests Singaporean investors are becoming...

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