MAS to issue SGS Infrastructure bonds

Out-Law News | 09 Apr 2021 | 1:55 am | 1 min. read

The Monetary Authority of Singapore (MAS) will issue a new category of infrastructure bonds in the coming weeks, according to Straits Times.

The bonds will be called the Singapore Government Securities (SGS) Infrastructure, according to the Significant Infrastructure Government Loan Act (SINGA) which has been introduced to the parliament.

Singapore’s existing SGS, issued to develop the domestic debt market, will be renamed as SGS Market Development. Bonds in the two categories will share the same rank. MAS will manage the SGS Infrastructure and SGS Market Development programmes.

Under the proposed SINGA, Singapore’s government also plans to issue green bonds to fund long-term infrastructure projects that are considered environmentally sustainable. These green bonds will be counted as part of the total borrowing limit of S$90 billion ($67.2bn) under the proposed law. Public bodies will issue green bonds for non-Singaporean projects.

Mark Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “The announcement by the MAS that it will be launching a new category of infrastructure bonds appears to indicate that the Singapore government is likely to further expand the types of programmes and initiatives that it is willing to borrow to fund, rather than limiting such borrowing solely for the development of the domestic debt market, as was previously the case."

"MAS has clarified that it will manage all such bond programs holistically to avoid oversupply, and that it has also been clarified that the bonds will be priced along the same yield curve. They will also have the same tax and regulatory treatment, despite being of different categories. It appears unlikely that there will be significant differences between the categories of bonds issued going forward, with the sole main difference being the earmarked use of the proceeds raised.”

Singapore’s government under SINGA will be able to borrow up to S$90bn to spend on major infrastructure projects that will last for at least 50 years.

SGS Market Development bonds are tradable debt securities that pay a fixed rate of interest and have maturities ranging from two to 30 years.