Singapore develops facilities to lure investment into Asian infrastructure

It’s developing a pool of project finance loans into a collateralised loan obligation.

Singapore is developing two initiatives to help the take-off of Asian infrastructure financing, Monetary Authority of Singapore (MAS) managing director Ravi Menon said.

According to a speech, the MAS is developing a pool of brownfield regional project finance loans from banks into a collateralised loan obligation that institutional investors, including insurance companies and pension funds, can invest in.

The infrastructure debt distribution facility is supposed to help crowd-in institutional investors, Menon said.

The central bank is also working on the creation of investment benchmarks to make infrastructure an investable asset class. “This will allow investors to compare the returns of privately-held infrastructure debt and equity against other asset classes,” Menon added.

Moreover, Menon announced that MAS is developing platforms to assist e-trading infrastructure in Singapore as it is amongst the “choice destinations” for Asian bonds issuance. “Singapore’s bond market has been growing at a compound annual growth rate of around 9% over last five years to reach US$243b,” he added.

By next year, the central bank will introduce a new corporate structure for investment funds – the Singapore Variable Capital Company (S-VACC). This will allow asset managers to co-locate their management and domiciliation activities.

“We have simplified regulations to facilitate the activities of VC and PE managers,” Menon said. “The increased availability of alternative investments like VC, PE, and infrastructure has helped to attract sovereign wealth funds and pension funds.”

Moreover, MAS said it is strengthening the ecosystem for family offices. “The quality and capability of service providers of family offices – like lawyers, consultants and tax advisors – has deepened,” Menon added.