After a bustling 2024, the Singapore dollar bond market kicked off 2025 with its first deal as Crédit Agricole brought its tier-2 subordinated bond to a market that is set to hit new heights this year on the back of the currency’s proven resilience to the political and economic volatility, as well as deepening capital depth catering to solid demand.

Last year was a sizzling and hectic one for the market, which recovered from sagging numbers to hit a record level. Led by financial issuers, Singapore dollar-denominated bond issuance reached nearly S$31 billion ( US$22.6 billion ), increasing by more than half over 2023, according to data compiled by Singapore-headquartered digital banking and wealth management platform iFAST.

Also 2024 marked the fastest year of growth in corporate Singapore dollar-denominated bond issuance, exceeding S$20 billion.

And, not only did local government and business operators favour the currency, several overseas corporates, mostly financials, were also drawn to Singapore dollar-denominated securities.

Deutsche Bank tapped the market in March 2024 with a S$400 million bond issuance, after its maiden entrance in 2022. London-headquartered HSBC leveraged on the Singapore dollar bond market three times in 2024, including a S$1.5 billion perpetual bond, bringing its total issuance to S$2.38 billion. And Swiss bank UBS issued three perpetual bonds worth S$1.3 billion.

The Singapore dollar has become the darling of the market given its relatively low volatility and stable credits, which are material to underpinning its solid demand. On top of that, the Monetary Authority of Singapore ( MAS ), the city-state’s central bank, has held off monetary easing sustaining the competitive edge of the currency’s yield appeal amid the end of a rate cut cycle.

On the other hand, the robust Singapore dollar activity is a potential outcome of the European banks need to raise capital to meet tier-1 requirements.

Apart from the Singapore dollar’s strength and stability to back up European bank reserves, the foreign confidence in the currency reflects strong pre-existing Europe-Singapore business ties, among them, the Digital Trade Agreement that took effect last year, which has widened the scope of trade by electronic means, a move designed to enrich the EU-Singapore Free Trade Agreement.

This stepping up the trade relations bodes well for more cross-border transactions and more opportunities for Singapore dollar deals this year.

Given that Singapore has been acting as a net credit provider since 2022, MAS data show, the deepened Singapore-European Union relationship serves as one of the main drivers of Singapore dollar issuance.