Singapore aims for green bonds, new fund structure

24 March 2017   Category: News, Asia, Global, Singapore   By Asia Asset Management

Authorities in Singapore plan to introduce green bonds as one new initiative to broaden its investment universe. In addition, a new fund vehicle has been proposed to complement existing structures.

Speaking at the 20th annual Investment Management Association of Singapore (IMAS) conference held on March 23, Lawrence Wong, Minister for National Development and Second Minister for Finance, said a green bond market could add depth and breadth to the local debt market. Globally, the green bond market was worth about US$80 billion in 2016.

To help spur the market’s development, Mr. Wong disclosed that the Monetary Authority of Singapore (MAS) would launch a green bond grant scheme this year to help promote issues of the securities. “Qualifying issuance can offset 100% of expenses attributable to obtaining an external review for green bonds, up to a cap of S$100,000 (US$71,480) per issuance,” he said.

Mr. Wong also announced that the MAS would launch a consultation study to seek feedback on a new corporate fund vehicle, the Singapore Variable Capital Company.

Among its features, the new vehicle would allow for both open-ended and closed-ended structures, investments across all asset classes and for use by retail and private funds.

Mr. Wong noted that under the new vehicle, all administrative activities could be consolidated at the umbrella level. “This means that sub-funds, with varying risk levels, different investment objectives, and classes of investors can be housed under the same umbrella as a single legal entity,” he added.

In the local regime, funds are currently structured as unit trusts, companies and limited partnerships.

This year’s IMAS annual conference attracted close to 280 attendees; the association has 120 corporate members, up from just 20 when it was launched in 1997.