Singapore-dollar bond sales rose to a half-year record as private-wealth clients in the city-state, which has the world’s highest density of millionaires, sought refuge in the local currency.
Genting Singapore Plc, Asia’s second-biggest casino operator by market value, and Keppel Corp. lead a 44 percent increase in issuance this year to S$15.7 billion ($12.3 billion), compared with the second half of 2011, data compiled by Bloomberg show. Private-banking investors bought as much as 35 percent of Singapore-dollar notes this year, about twice as much as two years ago, according to Deutsche Bank AG.
Top-rated Singapore’s appeal among private-banking clients has risen as the local currency gained 12 percent since 2009 and Europe’s financial turmoil deepened with Greece’s new government struggling to meet targets for cutting its deficit. Singapore- dollar bond sales will at least match last year’s issuance, barring any major market disruptions, according to DBS Group Holdings Ltd, the biggest underwriter since 2009.
“Private banks have been the primary driver of Singapore dollar bond issuance,” Debashish Duttagupta, Asia-Pacific head of investments at Citigroup Inc.’s wealth management business, said in an interview from Singapore yesterday. “The Singapore dollar looks like a safe harbor in these stormy conditions.”
Citigroup ranked second among wealth managers for high net worth individuals in the Asia-Pacific region, according to a Private Bank International survey in 2011.
Singapore-dollar bond sales peaked at S$24.7 billion in 2010, the most since at least 1999, according to data compiled by Bloomberg. In 2011, companies issued S$21.3 billion of securities, the data show.
The country is one of about a dozen globally that still have top rankings from the three credit-rating companies. Denmark increased its bond sales target last week to take advantage of its AAA rated debt as investors flee the euro area.
Singapore’s private wealth grew 8.2 percent in 2011, according to research by Boston Consulting Group, outpacing the 1.9 percent global pace. Total household wealth in Singapore is estimated to grow to $1.4 trillion in 2016 from $1 trillion in 2011, the study shows.
“Noticeable growth of private-bank interest in Singapore- dollar bonds has just started a few years ago,” Clifford Lee, head of fixed income at DBS in Singapore, said in an phone interview on June 22. “With interest rates expected to stay low and market volatility persisting, this interest can be expected keep growing.” DBS arranged S$6.38 billion of sales this year, according to data compiled by Bloomberg.
More than $4 trillion has been erased from global equities since March amid concern that worldwide economic growth is threatened by Europe’s debt crisis.
This has spurred the three biggest declines in global stocks since March 2009. The MSCI All-Country World Index fell 24 percent from May through October 2011 as Greece struggled to agree with creditors on debt writedowns. The gauge fell 10 percent from the 2012 peak amid concern Greece would exit the euro and the crisis spread to Spain.
The Singapore dollar’s gain compares with a 0.11 percent depreciation in the Hong Kong dollar since the start of 2009. Singapore corporate bonds returned 4.69 percent in that period, compared with 3.86 percent for Hong Kong corporate debt, according to data compiled by HSBC Holdings Plc.
“Investors with Singapore dollar liquidity in search of yield and security are buying domestic bonds,” said Emmanuel Bucaille, head of products Singapore at UBS Wealth Management.