MAS, SGX roll out new framework to provide greater retail access to bonds

Issuers will be able to sell to retail investors without issuing a prospectus.

The Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) have separately released consultation papers on a new framework that will make it easier for retail investors to buy bonds.

The SGX’s consultation paper is regarding a proposed bond seasoning framework, under which retail investors will be able to purchase bonds initially offered by eligible issuers to institutional and accredited investors, after these bonds have been listed for six months, also known as seasoned bonds.

According to SGX, “First, retail investors can purchase SGX-listed wholesale bonds initially denominated in S$200,000 or above in smaller lot size six months after their listing (“seasoned bonds”). Second, SGX proposes to allow issuers to make subsequent offers of new bonds on the same terms as the seasoned bonds to retail investors directly. Eligible issuers will be able to offer bonds more efficiently to retail investors through this framework.

Meanwhile, the MAS is proposing prospectus exemption for eligible issuers (i) offering plain vanilla bonds and (ii) making subsequent offers of bonds on the same terms as seasoned bonds

“MAS has identified areas in its regulatory regime that could be streamlined to make it easier for corporates to offer bonds to retail investors while maintaining sufficient safeguards. Currently, any offer of securities to retail investors must be accompanied by a prospectus registered by MAS. MAS proposes to refine the
current prospectus requirements for offers of plain vanilla bonds made by issuers who meet specified eligibility criteria,” noted the MAS.