Singapore Covered Bonds - Singapore

1	What type of assets may be included in the cover pool?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Residential mortgage loans x Derivatives x Other x For further comments, please see Comments section at the end of the questionnaire.
2	What is the geographical scope of assets?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Domestic x Other x No restriction on geographical scope of the mortgage assets
3	Is there a maximum level for substitute assets in the statutory national framework?	Yes, please specifiy Yes, 15%.
4	Are there any reporting requirements for covered bond issuers to investors?	Yes, by law and in line with art. 14 of EU Covered Bond Directive Issuers are bound by law for timing of disclosures and are currently all reporting under the HTT template under the Covered Bond label.
5	What is the frequency of reporting to investors?	Quarterly

1	What is the basis for property valuation	Market value Valuation must be conducted at least annually, or on a more frequent basis where the property market is subject to significant changes in conditions.
2	Is a regular update of the property value required?	Yes, automated / indexed valuation sufficient Not specified under MAS Notice, however contractually all issuers currently use indexed valuation in their covered pool reporting.
3	What are the LTV limits (single asset based)? Please specify in %/n.a.	Residential Residential 80%. No additional limits on portfolio basis applicable.
4	Are loans in excess of LTV limits eligible for inclusion in the cover pool?	Yes (soft limit) Loans in excess of LTV limits can be included in the cover pool, but all amounts above 80% will not be given benefit under the ACT calculations.

IV.1 Derivative contracts in the cover pool

1	Are derivative contracts eligible for the inclusion in the cover pool?	Yes, exclusively for hedging purposes (by law)
2	Are there requirements for derivative contracts (e.g. eligibility criteria for hedging counterparties)?	No Not specified under MAS Notice, contractually governed.
3	Will derivative contracts remain in case of insolvency of the issuer?	Yes
4	If derivatives are permitted in the cover pool, what is their ranking?	Pari passu to covered bond holders

IV.2 Exposure to market risk

1	What is the primary method for the mitigation of market risk?	Use of derivative hedging instruments
2	Are there mitigating provisions for interest rate risk?	Other Contractually governed. MAS Notice requires regular stress tests on risks including default, prepayment, currency, interest rate, counterparty and liquidity risks.
3	Are there mitigating provisions for foreign exchange risk?	Other Contractually governed. MAS Notice requires regular stress tests on risks including default, prepayment, currency, interest rate, counterparty and liquidity risks.
4	Are there mitigating provisions for maturity mismatch risk?	Other Contractually governed. MAS Notice requires regular stress tests on risks including default, prepayment, currency, interest rate, counterparty and liquidity risks.
5	What type of coverage test is applied?	Nominal cover
6	Are there stress scenarios applied?	Yes, other Contractually governed. Stress tests on affordability and property valuation are regularly performed by issuers.

IV.3 Liquidity risk

1	Is exposure to liquidity risk mitigated?	Yes, contractual obligations Contractually governed. MAS Notice requires regular stress tests on risks including default, prepayment, currency, interest rate, counterparty and liquidity risks.
2	What liquidity risk mitigation requirements are in place (principal)?	Other, please specify Other: Contractual arrangements, e.g. maturity extension or 12 months prematurity test for hard bullets. Contractually governed. MAS Notice requires regular stress tests on risks including default, prepayment, currency, interest rate, counterparty and liquidity risks.
3	What liquidity risk mitigation requirements are in place (interest)?	Other, please specify Other: Contractual arrangements, e.g. establishment of a reserve fund. Contractually governed. MAS Notice requires regular stress tests on risks including default, prepayment, currency, interest rate, counterparty and liquidity risks.
4	What is the consequence of not fixing a breach of liquidity risk mitigants?	Other, please specify Other: Contractual arrangements, typically an event of default. Contractually governed. MAS Notice requires regular stress tests on risks including default, prepayment, currency, interest rate, counterparty and liquidity risks.
5	If 180 days liquidity provisions are in place, what types of liquid assets are eligible	Other, please specify Other: Contractual arrangements. Not specified under MAS Notice, contractually governed.
6	If 180 days liquidity provisions are in place, the calculation of principal is based on:

IV.4. Maturity extension

1	Is maturity extension allowed by national law?	Yes but optional Not specified under MAS Notice, contractually governed.
2	Is it possible to issue…	Hard bullet Soft bullet Conditional pass-through As a AAA-rated sovereign, no reason for issuers to consider a conditional pass-through.
3	Which trigger plays a role for maturity extension according to law - independent or alone or in combination?	Other Not specified under MAS Notice, contractually governed.
4	Does any competent authority need to give its okay (or non-opposition)?	No

IV.5 Overcollateralisation

1

Is mandatory overcollateralisation required in the law ?

Covered Bond Type - 3% - Nominal The value of assets in a cover pool shall be at least 103% of the face value of the covered bonds secured by the assets at all times.

V.1 Cover pool monitor (CPM)

1	Is there a cover pool monitor in addition to national competent authorities in the statutory law?	Yes, by law and in line with Article 13 of EU Covered Bond Directive Current national legislation is in line with the principles of Article 13 of the EU Covered Bond Directive. The cover pool monitor must be an external third party, qualified auditor under the Companies Act (Cap 50).
2	Is the CPM separate from the issuing credit institution?	Yes, required by national statutory law
3	Is the appointment, dismissal, eligibility criteria and the role of the CPM regulated by the national statutory law?	No Not specified under MAS Notice, contractually governed.

V.2 Banking supervision

1	Which are the national competent authorities designated to carry out covered bonds public supervision in the law?	Monetary Authority of Singapore (MAS) - Website
2	Is a special permission required for a covered bond programme according to national law?	Others, please specify Prior to the issuance of covered bonds, banks will be required to submit information on their covered bond programme to MAS at least one month in advance and at least 3 business days prior to each issuance under the programme.
3	Is there a covered bond issuance limit in law or regulation? If yes, please specify	Yes There is an encumberance limit imposed on all eligible issuers, equivalent to 10% of total assests (excluding assets earmarked for regulatory reserves and liquidity requirements and assets of subsidiaries)
4	Does the national statutory law provide for the appointment of a dedicated cover pool administrator in case of insolvency/resolution (transfer included acc. to BRRD [Bank Recovery and Resolution Directive])?	No Not specified under MAS Notice, contractually governed.
5	Which is the typical frequency in the national statutory law of reporting from the covered bond issuers to the designated competent authorities?	Other Reports certified by a qualified cover pool monitor has to be submitted to the regulatory authority annually at minimum.

1	Does the national statutory law meet the requirements laid down in the EU Covered Bond Directive?	No Singapore is not an EU member state and there is currently no requirements to meet the EU CRR Directive or EU Covered Bond Directive. However, national statutory law is aligned to the principles of the EU Covered Bond Directive.
2	Does the statutory law meet the requirements of Article 129 of CRR [Capital Requirement Regulation]? In this case, please specify the collateral types meeting the Art. 129 CRR.	No Singapore is not an EU member state and there is currently no requirements to meet the EU CRR Directive or EU Covered Bond Directive. However, national statutory law is aligned to the principles of the EU Covered Bond Directive.
3	Does the statutory law allow covered bonds out of the scope of Art 129 of CRR? In this case, please specify the collateral	No Singapore is not an EU member state and there is currently no requirements to meet the EU CRR Directive or EU Covered Bond Directive. However, national statutory law is aligned to the principles of the EU Covered Bond Directive.
4	Are listed covered bonds eligible in repo transactions with the national central bank?	No Singapore is not an EU member state and there is currently no requirements to meet the EU CRR Directive or EU Covered Bond Directive. However, national statutory law is aligned to the principles of the EU Covered Bond Directive.

Primary Legislation

• 2022-06-24 MAS Notice 648 effective 1 July 2022 (ENG).pdf (English language)

Fact Book

• 3.35 Singapore.pdf (English language)

Any further comments/information?

Further comments on Section II.1: The cover pool can also include any other loans secured by the same residential properties or any other assets forming part of the security package under the mortgage loans (such as guarantees and indemnities). Derivatives held for the purpose of hedging risks arising from the particular issuance of covered bonds, Cash (including foreign currencies), Singapore Government Securities and MAS Bills.