The Asian Covered Bond Forum


The Asian Covered Bond Forum, held on Tuesday 10 March at the Grand Hyatt Singapore, was a great success once again. Co-hosted with the European Covered Bond Council (ECBC), the conference brought together over 170 existing and potential issuers and investors from Asia.

National authorities and banks throughout Asia are looking at how they can use covered bonds to meet their needs. Singapore and South Korea are leading the way, having already developed legislation for the product. Both countries were strongly represented at the event.

Discussions at the event focussed on what the challenges are to developing a functioning covered bond market in Asia and what elements issuers and investors need clarification on in order to make an inaugural issue possible.

The opening panel highlighted the benefits of covered bonds as a stable, reliable funding tool – and as importantly for investors, the only exemption from bail-in - which is very useful in times of market stress, as demonstrated by the Eurozone crisis. However speakers acknowledged that in markets like Singapore, where banks are already well-capitalised and do not struggle for funding, there is a need for government intervention to launch a covered bond market. Furthermore Asian investors are looking for yield – and at the moment, global covered bonds are not providing the yield they need.

The second panel focussed on the Singapore market in detail. We were very fortunate to be joined by all three of the major Singaporean bank treasuries and Bernard Wee of MAS. The discussion explained the main elements of the Singapore framework, the specificities of the mortgage market and bank regulation, and the likely next stages of covered bond development. The speakers remained broadly optimistic that a solution would be found in the short term for the remaining hurdles to the launch of the inaugural Singapore covered bond, and we left the session hopeful that the current market expectations of an issue by the summer may be met.

The third panel explained the legal standards and ratings criteria for various covered bond structures around the world, providing an in-depth insight to educate the audience on how to analyse a covered bond and what level of transparency, investor protection and collateralisation should be expected.

After lunch, the fourth panel focussed on the European market. Panellists naturally began the discussion by explaining the ECB’s purchasing programme and quantitative easing measures, and what they mean for covered bonds. While that may seem a negative for the market, the speakers were hopeful that the new sovereign debt purchases could ease the pressure on covered bond volumes and allow private investors more access to the market again to restore some sort of ‘normal’ equilibrium.

The closing session gathered three fund managers who covered a lot of ground in their discussion of the major trends in Asian bank debt investment and what investors would be looking for from any future covered bond issuance in the region.

Euromoney would like to thank all our sponsors – DBS, LBBW, Natixis, Societe Generale and CFF - speakers and delegates for making this event such a success. We very much look forward to reconvening next spring, by which time we will hopefully have seen the inaugural covered bond issue from at least one Asian country.

Tue 10 Mar 2015

Grand Hyatt Singapore