SGX offers Malaysian sukuk issuers connectivity to global investors

A Singapore Exchange (SGX) signage is pictured at their premises in Singapore October 17, 2013. — Reuters pic
A Singapore Exchange (SGX) signage is pictured at their premises in Singapore October 17, 2013. — Reuters pic

KUALA LUMPUR, July 26 — Malaysian corporate sukuk issuers should use the Singapore Exchange (SGX) to attract international investors due to its position as Asia’s biggest debt securities listing hub.

SGX Head of Fixed Income Trading Rehan Ahmad said Malaysia had the advantage of having a more diversified range of sukuk issuances, which suited investors’ risk appetite compared with those issued by the Gulf Cooperation Council (GCC) members, which mostly consisted of government sukuk.

Malaysian companies had been using the exchange to attract more international investors, he told a media briefing here today after giving a presentation on Asia’s growing debt issuance market.

Among the companies with presence on the exchange are Khazanah Nasional Bhd, Axiata Group Bhd, Tenaga Nasional Bhd, Sime Darby Global Bhd, and RHB Bank.

Rehan noted Malaysian investors were also showing more interest in sukuk issued in the GCC markets, which consist of Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.

Last year, Malaysia sukuk issuance for the onshore and offshore markets increased by 45.3 per cent, reaching US$97.9 billion, while the global scene was dominated by GCC entities, which issued bonds and sukuk worth US$174.17 billion.

“Looking at the sukuk issuance in the GCC, they are more tied up to the oil prices and most are issued by the governments,” he noted.

He said new participants in Asian bonds had been seen over the last five years, proving that international investors had a greater appetite for Asian bonds now given the favourable liquidity and funding conditions.

“We can also see increased cross-border flows, of which the estimated flow breakdown for Asia bonds was at 35 per cent for inter-Asia, 35 per cent for between Asia and the European Union and United Kingdom, and 30 per cent for between Asia and the US,” he explained.

However, cross-border connectivity remained an issue within the Asian market, he said.

“We realise connectivity is an issue, which is why SGX Bond-Trading (SGX-BT) is a general counterparty that stands in the middle of trade,” he added.

SGX-BT operates as a general counterparty on its platform dubbed Bond Pro.

To date, there have been more than 3,100 debt securities listed on the SGX by 950 issues from 47 countries, with more than US$1 trillion outstanding amount in 19 different currencies, making it Asia’s largest debt securities listing hub. — Bernama

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