Time to Boost Singdollar Bond Growth

Following the successful rejuvenation of Singapore’s stock market through recent development programmes, attention is shifting toward the local fixed-income space. A vibrant Singapore dollar (SGD) bond market is no longer just a "nice-to-have" feature; it is essential for matching the long-term liabilities of our ageing population and financing the rapid growth of local enterprises.

The Rising Cost of Offshore Hedging
Historically, local insurers and pension funds looked to the US dollar (USD) market for yield. However, the landscape has fundamentally shifted. As the SGD remains resilient against a weakening greenback, the cost of hedging USD back to local currency has climbed to between 2 and 3 per cent. This "hedging tax" has made many offshore bonds less attractive than domestic ones, forcing asset managers to either take on higher credit risk or hunt for liquidity in unlisted private credit.

Funding the AI and Green Transition
A robust debt market is the lifeblood of innovation. Global firms are estimated to commit up to 700 billion USD toward Artificial Intelligence (AI) capital expenditure in 2026. In contrast, local firms averaged only 19 million SGD in 2025. To avoid falling behind in the AI race and the low-carbon transition, Singaporean companies must be able to tap into the nation’s deep liquidity pool through disciplined debt financing.

A Blueprint for Market Resilience
Singapore should seize the current window of opportunity as global investors seek to diversify away from USD debt. By emulating the growth of the Australian bond market and encouraging external credit ratings for local issuers, the Republic can attract sovereign wealth and foreign "real money" investors. Building on the momentum of equity reforms will ensure that our financial ecosystem remains a global leader, providing beneficiaries with stable, diversified returns amidst increasing geopolitical volatility.