Securitization market in Singapore

This page updated regularly deals with securitization developments in Singapore. If you have any news or development to contribute to this, please write to me.

Updates:

Market developments:

One of the earliest transactions in Singapore is the end-1998 securitisation of real estate receivables by a company called Neptune Orient Line. This was a sale and leaseback of an office property funded by 10 year fixed rate mortgage backed bonds.

The major securitisation transactions in Singapore have involved commercial real estate, residential sales progress payment, credit card receivables, bonds and loans. An article by Ng Kah Hwa in Nov. 2000 issue of Journal of International Banking Law says that so far, a total of Sing $ 1.92 billion worth of bonds have been sold in the domestic market via 6 commercial properties and one residential condominium.

One of the notable deals in Singapore market has been that by DBS Bank. This was in June 2000 - it is an asset backed short term notes program. In 1999, DBS Land, a property company, raised Sing $ 1.3 billion by securitising three office buildings in three separate deals.

Diners Club has also to its credit a recent transaction. This was a 300 year Sing $ 100 million transaction backed by credit card receivables.

Singapore by and large adopts the English common law system.

Assignment of actionable claims requires legal notice to the debtor under sec. 4 (6) of the Civil Law Act. Hence, in order to avoid debtor notification, assignments in Singapore will have to be equitable assignment. [For meaning of equitable assignments, see report on Malaysia - click here.] Equitable assignment has its own risks, such as existence of prior or superior claims, rights of set-off etc. Not being the legal owner of the receivables, the securitisation SPV cannot bring claims against debtors in its own name and would have to depend on the originator.

In case of mortgage loans, the transfer of receivable would also entail the transfer of the underlying mortgage, which would require compulsory registration with Registrar of Titles and Deeds.

See below for Monetary Authority of Singapore's regulatory pronouncement on the subject.

Income-tax issues relating to securitisation in Singapore are the same as in most other countries. There is no specific provision relating to securitisation.

Singapore has a Goods and Services Tax (GST). GST is not applicable on issue or transfer of "debt securities". It is felt that the definition of "debt securities" in Para 3 of the Fourth Schedule to the GST Act is wide enough to exclude securitised notes from the applicability of GST.

Stamp duties are applicable on the assignment of mortgages at a rate of Sing $ 500. Securitisation of other receivables is exempt from stamp duty pursuant to amendments made effective from Feb. 28, 1998.

An annual report for the Monetary Authority of Singapore (MAS) indicated that the regulatory guidelines for capital adequacy treatment in case of securitisation are expected to be finalised by the third quarter of 1999. The regulatory guidelines of MAS were finalised sometime in September, 2000. The text has been further amended in July 2006 - click here to visit securitisation laws page.

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