The Business Times:
Singapore’s covered bond market may well be in line for the first local currency issues following hints from the regulator of changes to broaden the appeal of the instruments.
Two key suggestions are for the Monetary Authority of Singapore to allow the use of covered bonds in repo transactions with the central bank and to lift the encumbrance limit (the percentage of a bank’s assets that can be used in the collateral pool for covered bonds).
Currently, the encumbrance limit for Singapore is 4 per cent, on par with Canada, but lower than 8 per cent for Australia and 10 per cent for New Zealand. Many other jurisdictions have no encumbrance limits at all.
“The two banks (DBS and UOB) are around halfway towards their encumbrance limits,” said Bernard Wee, executive director of financial markets development, and fintech and innovation group at MAS.
The full article is available at http://www.businesstimes.com.sg/banking-finance/singapore-hints-at-covered-bond-reforms