For more information, please contact:
Ashok Lalwani Principal +65 6434 2684 Ashok.Lalwani @bakermckenzie.com
Stephanie Magnus Principal +65 6434 2672 Stephanie.Magnus @bakermckenzie.com
Pallavi Gopinath Aney Principal +65 6434 2762 Pallavi.Gopinath.Aney @bakermckenzie.com
MAS announces the Asian Bond Grant Scheme
In order to further develop Singapore's bond market and to strengthen Singapore's value proposition as Asia's leading bond centre, the Monetary Authority of Singapore (the "MAS") has recently introduced the Asian Bond Grant Scheme (the
"Scheme"). After announcing the Scheme in late 2016, the MAS issued the
Scheme on 9 January 2017.
The Scheme aims to co-fund 50% of eligible expenses attributable to the issuance of certain qualifying Asian bonds in Singapore.
The funding period is three years from 1 January 2017 to 31 December 2019 (both dates inclusive). Funding is available for valid applications relating to issuances that take place during the funding period.
Funding is only available once for each qualifying issuer and only in relation to eligible expenses.
Eligible expenses (which must be paid to Singapore-based service providers) include:
arrangers' fees; legal fees; auditors' fees; credit rating fees; and listing fees.
Eligible expenses do not include printer's fees, trustee fees, paying agent fees, roadshow and marketing expenses and all applicable Goods and Services Tax (GST) and other equivalent taxes.
Issuance Expense Ceiling
The Scheme requires 50% of the total eligible expenses to be subject to a ceiling of:
SGD 400,000, where the qualifying issuance is rated by any of S&P, Moody's or Fitch; and
SGD 200,000, where the qualifying issuance is not rated.
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A "Qualifying Issuer" is a first-time Asian company or non-bank financial institution with global headquarters in an Asian country,
including any ASEAN country, China, India, South Korea, Japan, Australia and New Zealand (together, the "Qualifying Jurisdictions").1
Non-bank financial institutions include policy banks or exportimport banks, but exclude institutions with a deposit-taking license or which are licensed or regulated as a "bank" by the relevant
authority in their home country.
A Qualifying Issuer may be based onshore or offshore.
Any local currency in the Qualifying Jurisdictions (i.e., THB, VND, IDR, SGD, PHP, MYR, MMK, KHR, LAK, BND, RMB, INR, KRW, AUD and NZD) and the G-3 currencies (i.e., USD, Euro and Yen).
Grant Application Process
A Qualifying Issuance is an offering by a Qualifying Issuer in a Qualifying Currency, which also meets the following criteria:
the initial issue size should be at least SGD 200 million (or its equivalent in another currency);
more than 50% of the gross revenue from arranging the issue should be attributable to one or more lead arranging banks which is a Financial Sector Incentive ("FSI") company based in Singapore;
the bonds should be "Qualifying Debt Securities" for income tax purposes;
the bonds should have a non-redeemable tenor of at least 3 years;
the bonds should be listed on be listed on the SGX; and if the bond issuance is denominated in SGD, a rating
should have been obtained from any of S&P, Moody's or Fitch.
While the applicant is the issuer, the application must be submitted through a lead arranger bank who is an FSI company in Singapore.
Prior to issuance, such lead arranger must verify the issuer's eligibility for the Scheme.
Post-issuance, such bank must submit the application form (along with the relevant invoices) on behalf of the qualifying issuer within a period of three months after the issuance date.
This client alert is provided for general information purposes only, is not intended to be exhaustive, comprehensive or authoritative and does not constitute legal advice. The various aspects of the Asian Bond Grant Scheme discussed in this client alert can be developed in greater detail on request and we can further analyse issues specific to a proposed transaction, on a case by case basis.
1 The member nations of the Association of Southeast Asian Nations (ASEAN) are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
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