Jacqueline Loh: Strengthening Asia's bond markets Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the Asia Securities Industry & Financial Markets Association's Annual Conference, Singapore, 17 November 2016. * * * Andrew Ng – Chairman, ASIFMA Mark Austen – CEO, ASIFMA Greg Medcraft – Chairman, Australian Securities and Investments Commission, and my fellow keynote speaker Fellow regulators and central bankers Distinguished guests Ladies and gentlemen 1  It is my pleasure to join you this afternoon at the 10th ASIFMA Annual Conference. 2 When I last spoke here two years ago, the global economy was confronted by what the IMF described as “legacies, clouds and uncertainties”, and was forecast to grow at just 3.3%1. Two years on, in 2016, the IMF has lowered its forecast for the current year further to 3.1%, reflecting a more subdued outlook for advanced economies, before recovering to 3.4% in 20172. This is below the immediate pre-GFC average of 4.2% over 1998–2007, though more aligned with its long-term average of 3.1% over 1980–1998. 3 The medium-term growth story for Asia is bright. The IMF’s outlook for the next five years is for emerging and developing Asia to grow by a robust 6.3%, well above the forecast for the US (1.9%), Europe (1.5%) and Japan (0.5%), and will underpin the higher investment returns in this part of the world. 4 Asia’s bond markets have softened in recent years but has much potential alongside its relatively strong economic growth outlook.
19 Singapore already offers an excellent ecosystem of financial institutions, professional services like legal and accounting, credit rating agencies, and market infrastructure for Asian companies to issue, market, list and trade their bonds. To make it more attractive for Asian issuers to raise international capital in Singapore and benefit from the ecosystem here, we will introduce an Asian Bond Grant scheme next year. The scheme aims to broaden the base of issuers in our bond market, which will add to the breadth and diversity of debt instruments for the 4/7  BIS central bankers' speeches  investing community. Qualifying Asian issuances will be able to offset up to 50% of one-time issuance costs such as international legal fees, arranger fees and credit rating fees. We have consulted with local market participants on various aspects of the scheme to ensure a smooth implementation. I am glad to say that the industry has been supportive of this initiative, and together we are confident that this will enhance Singapore’s value proposition. Encouraging rated issuances 20 Even as we draw Asian issuers to Singapore, we want to encourage these issuers to be rated. Credit ratings improve general market transparency by providing independent and comparable assessments of the credit worthiness of issuers. Together with business and financial information provided in the offering documents or company announcements, credit ratings can assist investors to better understand the issuer’s business and financial health.