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MAS to enhance regulatory regime for bonds

Goola Warden Published on Tue, Nov 22, 2016 / 8:37 PM GMT+8

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SINGAPORE (Nov 22): In a response to media queries on bond defaults, the Monetary Authority of Singapore has clarified the responsibility of issuers, investors, financial institutions and bond trustees. The focus of MAS regulatory regime is to empower investors through information disclosure and fair dealing, says the republic’s de facto central bank.

Of the $149 billion local bonds issued, some $1.1 billion or 0.78% have defaulted in the past two years. In total, six issuers have defaulted on their bonds. In addition to the defaults of Trikomsel and Pacific Andes in 2015, Swiber Holdings, Swissco Holdings, Perisai Petroleum Teknologi and Rickmers Maritime defaulted on their bonds this year. AusGroup and Marco Polo have successfully extended the maturity dates of their bonds while KrisEnergy is in discussions with its bondholders to avert default.

Among the steps MAS may take is to require issuers to disclose financial information in a more transparent manner including key financial metrics that would give investors a sense of the state of the issuers’ financial profile. In addition, issuers are meant to announce deterioration in their operations in a timely manner to the Singapore Exchange. This is likely to be strictly implemented. Questions and eyebrows were raised when Swissco announced it would default on the coupon payment its $100 million bonds just four days before payment, and without warning.