The Singapore Exchange (SGX) and Euroclear Bank, the Brussels-based international central securities depository, have launched a new Orchid bond structure in Singapore, combining domestic bond issuance with global distribution channels. SGX and Euroclear were both supported by HSBC in its capacity as custodian bank, arranger and paying agent in the setting up of the Orchid bond structure. International investors will be able to purchase bonds issued by Singapore-based issuers directly on SGX’s wholly-owned subsidiary, the Central Depository (CDP) via Euroclear. In addition, investors are set to benefit from real-time, multi-currency delivery versus payment settlement with any counterparty within Euroclear’s network. SGX and Euroclear will look to extend the offering beyond Singapore to other regional issuers. According to Gavin Powell, head of global markets, HSBC Singapore, current market infrastructure must adapt to keep pace with a highly digitised and international investor community. Powell says: “Technology is the key to unlocking greater market access. We are excited by the possibilities Orchid bonds will offer issuers, who are seeking diversified funding sources and deeper liquidity pools, and for international investors hungry to pursue wider investment options. HSBC is pleased to have supported SGX and Euroclear in taking this step forward; another demonstration of collaboration enabling greater opportunities.” Lee Beng Hong, senior managing director, head of fixed income, currencies and commodities, SGX, comments: “Asia is home to some of the world’s fastest growing economies and we continue to see issuers tapping into debt capital markets. This offering will deepen the bond market’s liquidity pool and has the potential to significantly expand the issuers’ investor base.” Stephan Pouyat, global head of capital markets and funds services Euroclear, adds: “This launch continues the successful momentum we have seen in the Asia region over the past year for this type of tailored solution. Within our ecosystem we see continued scope for this structure laying the foundation for ESG bond issuance in foreign currencies in the near future.” Earlier this month, the Bank of China became the first issuer to utilise Euroclear Bank’s recently launched Yulan bond structure.Euroclear Bank’s Yulan bonds are issued through Shanghai Clearing House and will enable Chinese issues to gain exposure to a wider foreign investor base. Additionally, back in December, the Brussels based international central securities depository collaborated with the Japanese capital market to introduce a new asset class, Origami bonds. Origami bonds are foreign currency denominated Japanese local bonds issued by domestic market participants and then distributed and settled in instant multi-currency delivery versus payment within Euroclear Bank.
