By Kit Yin Boey
SINGAPORE, April 13 (IFR) - A flurry of foreign fundraising, including a rare high-yield Chinese bond, has put the spotlight onSingapore's growing role in the global debt capital markets.
The city-state was buzzing with new deals again this week, underscoring Singapore's viability as an alternative to the US dollar market, with S$8.7bn (US$7bn) issued so far this year.
"It's getting to be the Swiss franc market for Asia," said one Singapore-based foreign banker. "It shows that the Singapore dollar is increasingly becoming a currency market of choice."
Driving the surge in activity are extremely low local benchmark rates, which are close to record tights -- even though the Singapore dollar is stronger than it has been in years.
The five-year SOR Singapore benchmark rate narrowed 14bp last week alone, ending on Wednesday at 1.14%. By Friday, the rate was 1.19%. The tightest ever was 0.735% last August.
"The Singapore dollar is becoming more international in breadth and availability," said one Hong Kong-based syndicate banker, who said he was growing his presence in local markets.
"And that is drawing interest from as far as Europe."
Central China Real Estate this week priced an increased S$175m five-year bond at 10.75%, inside the initial price talk of high 10% to 11%.
Meanwhile Hong Kong conglomerate Hutchison Whampoa has been mulling perpetuals in Singapore, potentially bettering its US$2bn 6% perpetual non-call five sold in 2010, and there has also been talk of an offer from Yanlord Land.
THEY LIKE IT
Investors have been keen to get exposure to the Singapore dollar, seeing good prospects of the currency continuing to appreciate as the government combats inflationary pressures.
The Monetary Authority of Singapore on Friday tightened rates to combat inflation, which stood at 4.6% in February -- more than double the 2.0% average since 2000.
Foreign investors also see Singapore, which boasts a Triple A, as a safe haven.
There has even been talk about investments earmarked for the Dim Sum market being redirected to Singapore dollar bonds - especially since Hong Kong accounts are taking bigger shares in deals out of the city-state.
The growing bid has allowed many recent Singapore dollar bonds to remain at or above par, while new US dollar issues have been hit by wild fluctuations.
While some investors gripe about trouble getting in and out of trades quickly due to current illiquidity, this has helped to keep prices stable.
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