News on Securitization in Singapore: Revival of Securitisation in Singapore

October 24, 2013:

Singapore is clearly witnessing a surge in its securitisation activities with two Singapore firms having completed its private placements of assets backed securities in just a week [1].Even issuers are now looking at securitisation to diversify their sources of funding as banks run up against single borrower limits and as they review their risk weighted assets amid tighter banking regulations.

Currently in the Asia-pacific region, Singapore is offering most favourable conditions for development of securitisation [2]. Although Singapore banks have strong liquidity, there appears to be a growing desire to improve its already robust financial ratios. The prospect of increased global competition compels Singapore banks to improve their operating efficiency and to source lower-cost funding.

Recent statistics indicate that Singapore’s economy is recovering from negative growth. Retail sales, share indices, and property prices and purchases are all on the rise. Banks are competing fiercely on the basis of loan pricing to build up their mortgage loan portfolios, much like before the recession. Besides pricing, lenders are prepared to assume more risk, sometimes refinancing mortgage loans at 100% of the loan outstanding, regardless of the current market value.

Singapore has enjoyed very stable economic performance with steady GDP growth. The success of securitisation transactions has bankers in Singapore betting on a revival of the securitisation market and suggesting more deals are in work. In addition, the government is leaving no stones unturned in promoting Securitisation in the country.

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Reported by: Paridhi Bagaria