The Monetary Authority of Singapore ("MAS") has renamed and expanded the Global-Asia Bond Grant ("G-ABG") scheme (previously known as the Asian Bond Grant ("ABG") scheme). The scheme was launched on 1 January 2017 to further develop Singapore's bond market by supporting bond issuances by Asian issuers in Singapore. The scheme aims to co-fund eligible expenses attributable to the issuance of Asian bonds in Singapore (including arranger's, legal, auditors', credit rating and listing fees).
We set out below further information on the expanded G-ABG scheme. In summary, the changes are (i) the scheme has been extended for a period of five years from 1 January 2020 (up to and including 31 December 2024), (ii) expansion of the qualifying issuer scope to include all first time issuers with an Asian nexus (previously they had to be headquartered in Asia), (iii) addition of a new funding tier for jumbo-sized bond issuances (that can receive a grant of up to SGD 800,000 for a qualifying rated issuance) and (iv) the non-redeemable tenure of a qualifying bond issuance has been reduced to only one year (previously three years).
G-ABG scheme criteria
Qualifying Funding Period: 1 January 2020 to 31 December 2024
First time companies and non-bank financial institutions ("NBFIs") with an Asian nexus. These issuers can be based onshore or offshore. The grant applicant shall be the Qualifying Issuer.
> First time issuers also include issuers who have not filed a Return on Debt Securities (RoDS) with MAS in the five calendar years from 2012 to 2016.
> NBFIs include policy banks (e.g. EXIMs) but exclude institutions with deposit-taking licence or licenced/regulated as a `bank' by the relevant authority. NBFIs with a deposit-taking licence may qualify under the G-ABG scheme on a case-by-case basis, provided their licences do not allow for the operation of savings or checking accounts.
> Qualifying issuers include issuers (i) with global headquarters in Asia, (ii) with business operations or projects in Asia or (iii) who are issuing in any Asian local currency, etc. Issuers can highlight other factors that demonstrate an Asian nexus.
> Asia includes ASEAN, China, India, South Korea, Japan, Australia and New Zealand.
Qualifying Currencies: Criteria: All Asian local currencies and the G-3 currencies. Notes: > Asian local currencies
refer to currencies of Asian countries including ASEAN, China, India, South Korea, Japan, Australia and New Zealand. > G-3 currencies refer to USD, EUR and JPY.
Qualifying Issuance: An issuance by a Qualifying Issuer in a Qualifying Currency and where:
(i) it declares itself to be a Singapore `Qualifying Debt Security' (QDS) for the purpose of income tax;
QDS must meet `substantially arranged in Singapore' conditions under the Singapore Income Tax (Qualifying Debt Securities) Regulations.
(ii) the initial principal amount issued is at least SGD 200 million (or its equivalent in another currency) or where the grant applicant will qualify for the Sustainable Bond Grant scheme, a programme size of at least SGD 200 million with an initial principal amount issued of at least SGD 20 million (or its equivalent in another currency);
Details of the Sustainable Bond Grant scheme can be found in MAS circular, FDD Cir 03/2019 dated 22 February 2019. A summary of the scheme can be found online here.
(iii) it has a non-redeemable tenor of at least one year;
Permissible early redemption circumstances are covered under MAS' prescribed list of standard early termination clauses under the scheme.
(iv) it is listed on the Singapore Exchange (SGX);
(v) more than half of the gross revenue from arranging the issue is attributable to Financial Sector Incentive
("FSI") companies in Singapore; and
Arrangement work includes:
> securing the mandate; > originating and structuring the bond issuance; > documentation and preparation of the offering circular
and related transaction documents; and > distribution and sale of the issuance.
(vi) it is rated by a credit rating agency if the currency of Credit rating agency refers to any financial institution
issuance is SGD.
regulated by MAS for the provision of credit rating services.
Business spending made to Singapore based providers and incurred by the Qualifying Issuer that are directly attributable to a Qualifying Issuance:
> arranger fees; > auditors' fees; > credit rating fees; > legal fees; > listing agent fees; and > listing fees. Notes:
Excludes all applicable `Goods and Services Tax' (GST) and other equivalent taxes, printer's fees, trustee fees, paying agent fees and roadshow and marketing expenses.
Where the Qualifying Issuance is unrated, eligible expenses shall be funded at a level of 50%:
> up to SGD 400,000 for jumbo-sized bond issuances (i.e. where the initial principal amount issued is at least USD 1 billion or its equivalent in another currency); or
> up to SGD 200,000 for all other issuances.
Where the Qualifying Issuance is rated by a credit rating agency, eligible expenses shall be funded at a level of 50%:
> up to SGD 800,000 for jumbo-sized bond issuances (i.e. where the initial principal amount issued is at least USD 1 billion or its equivalent in another currency); or
> up to SGD 400,000 for all other issuances.
In the case of a SGD-denominated issuance, credit rating fees shall be funded at a level of 100%.
> The grant will apply on a one-time basis for each jumbo-sized and non jumbo-sized bond issuance tier and on such eligible expense incurred by the issuer.
> Qualifying issuers who have successfully obtained a grant under the ABG scheme shall only be eligible for one of the issuance tiers under the G-ABG scheme. This means that successful ABG applicants who had issued a non jumbo-sized bond can only apply for the jumbo-sized bond issuance tier under the G-ABG scheme whereas successful ABG applicants who had issued a jumbo-sized bond can only apply for the non-jumbo sized bond issuance tier under the G-ABG scheme.
> Where the grant applicant will qualify for the Sustainable Bond Grant scheme using a programme size of at least SGD 200 million with an initial principal amount issued of at least SGD 20 million (or its equivalent in another currency), subsequent issuance(s) under the same programme will also be eligible as long as the (i) issuance(s) takes place within 1 January 2020 to 31 December 2024 (both dates inclusive) and (ii) total claims, including for the initial principal amount issued, are capped at SGD 200,000 for unrated issuances and SGD 400,000 for rated issuances.
> Credit rating agency refers to financial institutions regulated by MAS for the provision of credit rating services.
A Qualifying Issuer must appoint a lead arranging bank to carry out appropriate due diligence to determine whether the criteria is met, including consultation with MAS. The appointed lead manager must be a FSI company in Singapore.
The appointed lead arranger is required to submit a completed application form to MAS on behalf of the Qualifying Issuer, together with the requisite invoices for the reimbursement of eligible expenses, no later than three months after the issuance date. Where the invoice is denominated in non-SGD, the reimbursement in SGD would be at an exchange rate determined by MAS.
Key contacts For further information please contact:
Jonathan Horan Partner, Singapore Tel: +65 6692 5702 email@example.com
William Liu Partner, Hong Kong Tel: +852 2901 5257 firstname.lastname@example.org
Terence Lau Partner, Hong Kong Tel: +852 2842 4182 email@example.com
Karen Cheng Managing Associate, Hong Kong Tel: +852 2901 5566 firstname.lastname@example.org
Peter Frost Partner, Tokyo Tel: +81 3 6212 1212 email@example.com
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Amit Singh Partner, Singapore Tel: +65 6692 5802 firstname.lastname@example.org
Hwang Hwa Sim Partner, Hong Kong Tel: +852 2842 4103 email@example.com
Gloria Cheung Partner, Hong Kong Tel: +852 2842 4830 firstname.lastname@example.org
Grace Wee Counsel PSL, Singapore Tel: +65 6692 5837 email@example.com
Michael Ng Partner, Hong Kong Tel: +852 2842 4172 firstname.lastname@example.org
Sherry Cui Partner, Hong Kong Tel: +852 2842 4134 email@example.com
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