The new ‘Orchid’ bond structure will allow global investors to benefit from real-time, multi-currency DVP settlement with any counterparty within Euroclear’s network.
SGX (Singapore Exchange) and Euroclear Bank have announced the launch of the ‘Orchid’ bond structure in Singapore, providing a new distribution channel for bonds issued in the city-state.
To date, global investors looking to buy Singapore bonds have had to set up an SGX CDP account, which needs to be separately funded.
The Orchid structure will enable international investors to use assets held with Euroclear to purchase bonds issued by Singapore-based issuers directly on SGX’s CDP (The Central Depository).
This allows global investors to “benefit from real-time, multi-currency DVP settlement with any counterparty within Euroclear’s network”, SGX said.
Based in Brussels, Euroclear Bank provides settlement and related securities services for cross-border transactions involving domestic and international bonds, equities, derivatives and investment funds.
At the end of 2020, Euroclear held EUR 32.8 trillion in assets for clients.
The addition of the Orchid bond structure will also allow market participants to tap SGX as a one-stop issuance, listing and distribution platform, the bourse said.
Orchid bonds will initially be issued by Singaporean borrowers, with the first deal set to take place in 2021, SGX said it will work with Euroclear to extend the offering beyond Singapore to other regional issuers.
The setting up of the Orchid bond structure was supported by HSBC in its capacity as arranger, custodian bank and paying agent.
“This offering will deepen the bond market’s liquidity pool and has the potential to significantly expand the issuers’ investor base,” said Lee Beng Hong, Senior Managing Director and Head of FICC at SGX.