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Singapore – Retail Bond Offerings: MAS/SGX Responses And New Consultations.

6 March, 2015


Legal News & Analysis – Asia Pacific – Singapore  Capital Markets


On 23 December 2014, the Monetary Authority of Singapore (“MAS”) and the Singapore Exchange (“SGX”) issued responses to their recent consultation papers on retail bond offerings .
They also issued the following two new consultations on retail bond offerings (last day for feedback was 23 January 2015):


  • SGX Consultation Paper on Initiatives to Improve Retail Access to Debt Securities: Trust Deed Requirements (“SGX Consultation Paper”); and
  • MAS Consultation Paper on Draft Legislation to Effect the Policy Proposals to Facilitate Bond Offerings to Retail Investors.

This update looks at the responses by the SGX and the SGX and also the SGX Consultation Paper.

The MAS And The SGX Responses To Feedback Received

The MAS has explained that plain vanilla bonds may include the following:


  • Bonds that include an early redemption feature which enables the issuer to redeem the bonds at par before the end of the fixed term for taxation reasons, if it becomes obliged to pay additional amounts due to changes in a law or the application or interpretation of a law;
  • Bonds denominated in foreign currencies;
  • Secured bonds that are structured in accordance with the prescribed characteristics of plain vanilla bonds but offer additional security to investors by way of collateral; and
  • Covered bonds.

It has also clarified that plain vanilla bonds will not include bonds with embedded option features such as call and put options or which allow the bonds to be converted to equity securities.

The eligibility criteria for Exempt Bond Issuers have been refined. The MAS will provide a third alternative under the Credit Test to allow an issuer which has recorded yearly net profits of at least SGD 100m and positive net operating cash flows in each of the three most recent audited annual financial statements to qualify as an Exempt Bond Issuer.

The SGX has refined the Credit Test for issuers under the Seasoning Framework, with a view to allowing a greater diversity of bonds while maintaining appropriate safeguards, by:


  • Replacing the criterion that the issuer has not recorded a net loss over the previous five financial years with the criterion that the issuer has not recorded on average a net loss and has on average a positive net operating cash flow, for the three most recent audited annual financial statements; and
  • Reducing the threshold for previous bond issuance track record from SGD 750m to SGD 500m.

The SGX is lowering the minimum size of the initial offer to Specified Investors from SGD 300m to SGD 150m, to accord more flexibility to issuers.

The SGX will require a product highlights sheet (“PHS”) to be provided to investors at the time when the re-denominated Seasoned Bonds are made available for secondary trading on the SGX Mainboard.

The MAS has clarified that, as to the requirement for the bonds offered under the re-tap to have the “same terms” as the Seasoned Bonds, the maturity date, coupon rate, currency, denomination, and seniority in ranking of the bonds offered under a re-tap should be same as those of the Seasoned Bonds. However, the issue date and term to maturity of the bonds under the re-tap offer will differ from that of the Seasoned Bonds. The issuance price and size of the bonds under the re-tap offer may also be different from the issuance price and size of the Seasoned Bonds as the issuer may decide to offer a different amount of the new bonds at the prevailing market price.

The MAS will require a minimum subscription by Institutional Investors/Accredited Investors of 20% of the size of the aggregate offer (comprising retail and Institutional Investor/Accredited Investor tranches).

The MAS has clarified that the expectation is for the Simplified Disclosure Document and PHS (and any other disclosure that the issuer is required to provide to investors) to be disseminated to the public on the SGX’s website via SGXNET. This will be made clear in the conditions to the prospectus exemptions. However, the Simplified Disclosure Document need not be titled as a “simplified disclosure document”, as long as issuers provide a statement on the front cover of the document that it constitutes the simplified disclosure document as defined in the regulations.


SGX Consultation Paper In Trust Deed Requirements

The SGX Consultation Paper proposes changes to the trust deed requirements set out in the Listing Manual. The changes were prompted by feedback to the SGX’s initial consultation on retail bonds on the need for such a review. The SGX has accordingly proposed the following changes:


  • Rule 308 setting out the requirements for trust deeds will specifically provide that it applies only to offers of retail debt securities.


  • The trustee of such debt securities must satisfy similar requirements to those specified in the Securities and Futures Act.


  • Where debt securities are intended to be seasoned, the trustee and trust deed requirements will be made applicable upon listing of the debt securities that are intended to be seasoned.


  • Most of the detailed requirements currently imposed under rules 308(7) and 308(8) will be removed. Instead, rule 308 will simply provide that the trust deed must contain a covenant binding the trustee to exercise due diligence and vigilance in carrying out its functions and duties, and in safeguarding the rights and interests of investors. It should also contain a covenant that the trustee shall ensure that it has the ability and powers to perform all of its duties as set out in the trust deed.


  • Existing Rule 747(1) requires an issuer to announce any redemption or cancellation of the debt securities. The SGX proposes that issuers need to announce such information only if the redemption or cancellation crosses 5% thresholds, calculated based on the principal amount at the time of initial listing of the debt securities.


  • Debt securities issuers that also have equity securities listed on the SGX may disclose their financial statements in accordance with the reporting requirements prescribed in relation to their equity securities. Retail debt securities issuers that do not have equity securities listed on the SGX must submit a proposal on the arrangements for the disclosure of their financial statements.




For further information, please contact:


Choon Yuen Hui, Partner, WongPartnership 
[email protected]


WongPartnership Capital Markets Practice Profile in Singapore


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