In November, the state sold a mere 3. More than a thousand, mostly local investors, participated. The government is going to have work fast if it wants to sell stakes in some of the more attractive state-owned entities, such as Vietnam National Textile and Garment Group, Vinatex , Vietnam National Shipping Lines and MobiFone.
However, even if the government stays its course, reform could still be slow. Despite much progress, the government has yet to make good on some proposals that, if put into effect,. Despite a slow start to , South-East Asia is still seen as one of the hottest regional loan markets in Asia Pacific after a stellar Gunvor has just walked out of the sanction shadow and is targeting a bigger group of banks, while Noble Group has been caught up in a battle with Iceberg Research on allegations that the trader employed improper accounting rules to inflate its commodity holdings.
Indonesia started slow, but will pick up.
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Across the region, regular borrowers priced loans 25bp—55bp below previous levels in , as retail lenders struggled to find deals that could meet their funding costs. Singapore is moving closer to a long-awaited debut issue of covered bonds as regulators mull key improvements that are expected to help clear the way for the first offering to hit the market this year. The Monetary Authority of Singapore, which first set rules for covered bonds in to help its banks access cheaper funding, is now assessing the feedback on its latest consultation paper due at the end of February.
Covered bonds are senior notes secured against a pool of assets most likely in the form of loans, allowing issuers to sell them at lower interest rates.
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The tweaks also propose to give more flexibility in the loan-to-value limit, as well as the amount of cash and cash equivalents, a bank can hold as a portion of its covered pool assets to make it easier to meet covered bond requirements. DBS Bank had mandated Barclays Capital and Deutsche Bank in early on hopes of becoming the first issuer of a covered bond in the city state, only to be delayed amid uncertainty over whether covered bondholders had full entitlement to mortgages or could be subordinated by other entities like the Central Provident Fund.
Singapore allows its citizens to use proceeds from the CPF, a savings fund for employees, to pay for mortgage payments. In a liquidation event, the CPF could potentially earn a claim on homes first, instead of going to covered bondholders. Future pipeline Still, bankers are optimistic that the Singapore covered bond market will kick off once the changes from the recent consultation are accepted. This will allow different covered bonds to be sold and backed against the same pool of assets. Colin Chen, managing director and head of structured debt solutions at DBS, says the first covered bond can hit the market in the second half of this year.
Demand for Singapore covered bonds should be strong, given its stable mortgage market and its coveted Triple A sovereign credit ratings. The possibility that Singapore banks may be required to bulk up on liquid assets to conform to Basel III reforms can. Attracting cross-border listings has been the dream of many stock exchanges in South-East Asia, as cities vie for position as a regional financial centre.
Singapore has found some success with companies from China and India now listed on the Singapore Exchange, but deals have been few and far between. Thai-owned companies operating in these countries are natural listing candidates for the SET, as in the example of telecom infrastructure firm HyalRoute Communication Group.
In an effort broaden its stock market, Thailand has been encouraging listings of infrastructure funds and real estate investment trusts. Sam Kendall, global head of equity capital markets at UBS, puts this down to the fact that Thailand has not yet seen the same extent of privatisation as Singapore.
Kendall expects the potential listings out of these countries to be small to start with because many of them have regulatory, currency and ownership controls. The Thai regulator is backing the plan to attract foreign listings. Last year, the exchange issued draft rules allowing primary and dual shares offerings from foreign companies and soon plans to put out final regulations.
Vorapul said CLMV companies offered potential growth and diversification benefits. Under the draft rules, equity offerings from foreign companies must comply with laws and regulations in home juri.
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Anuradha Subramanyan. It is not for want of trying as bankers in Singapore have been busy bringing potential issuers to meet fixed-income investors, but a wide gap in pricing expectations and growing concerns over high-yield, energy-related credits have kept new deals at bay. The more open the local market, the more affected it is on the global volatility. More Asian issuers are tapping the US dollar markets before rates go up, while lower euro funding costs have also been tempting.
However, signs in the last couple of weeks have given South-East Asian bankers reason to be optimistic.
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A handful of deals are getting done in Singapore. This is reflected in the number of issues that have been sold in the market in recent weeks and have traded up in the secondary markets. Hong Leo. The pace of deals has slowed in recent months, but South-East Asia continues to provide a tantalising opportunity for capital markets professionals. There are local pressures, too.
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