Residential mortgage loans to make up bulk of covered bonds in Singapore: Moody’s

The big banks are potential issuers.

Residential mortgage loans will make up bulk of covered bond issuances in Singapore, a report by Moody’s Investors Service revealed today.

Moody’s believes that the big commercial banks in Singapore--namely DBS, OCBC, and UOB--will be potential issuers of covered bonds, given their large mortgage loan portfolios.

Moody's expects residential mortgage loans will comprise the main asset type in the covered bond pools. The loans are subject to loan-to-value limits of 80% in Singapore, which is in line with the 60%-80% range typically set in other
jurisdictions.

The report also notes that the Monetary Authority of Singapore’s new legal frameworks for covered bond issuance will protect investors against key credit risks, while contractual arrangements mitigate other risks and provide for additional features.