Wednesday, March 14, 2012

MAS may allow banks in Singapore to issue covered bonds

SINGAPORE: The Monetary Authority of Singapore (MAS) may allow banks in Singapore to sell covered bonds in limited amounts.

For banks, this could be an additional source of longer-term funding that is Basel III-compliant.

In a consultation paper on its website, the MAS proposes allowing covered bond issuance worth up to two per cent of the value of each bank's total assets.

Such bonds are secured against a pool of assets such as mortgages or public sector loans.

Fundsupermart's general manager Wong Sui Jau said: "For the investor, not only do they have recourse to the financial institution, there is also this cash-flow income that is coming from the assets such as public sector loans, which is an additional form of security."

The consultation paper adds that there may be additional requirements imposed on banks issuing covered bonds if MAS takes the view that such issuance increases risks to depositors.

View the original article here

Source From Channel News Asia

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