Singdollar bond issues may match recent highs due to geopolitical uncertainty: OCBC

[SINGAPORE] The outlook for the Singapore dollar-denominated bond market in 2026 is an “optimistic” one, with issuance volumes likely to approach the decade-high levels seen over the past two years.

This is on the back of continued demand for relatively stable markets amid geopolitical uncertainty, as well as refinancing needs and a pipeline of maturing notes.

Kenneth Yeoh, head of debt capital markets, global investment banking at OCBC, told The Business Times that the eddies of geopolitical uncertainty swirling about in 2026 “is actually quite good for the bond markets, as long as it’s not too volatile”.

Yeoh pointed to similar uncertainty seen in 2025, where the Singapore market – which was “relatively less volatile than other markets” – drew greater investor interest to local bond issuances.

He said the bank is optimistic about the Singdollar bond market getting close to the S$30.9 billion in issuances last year, but that will “again be determined by whether any of the big, chunky (notes) come up or not”.

The US Federal Reserve’s recent decision to stand pat on interest rates – OCBC’s house view is for one rate cut by the end of the first quarter – should also help to keep bond yields supported, said Yeoh.

Domestic issuance is expected to comprise about 40 per cent from real estate investment trusts and other property players, with the government sector and other corporates making up roughly 30 per cent each, broadly in line with the market mix seen in 2025.

One investor group that will continue buying Singdollar bonds are “regional or global names” with a Singdollar mandate, Yeoh noted. “While they can say, the US dollar bond might give me 10 basis points more yield on an after-swap basis, their mandate is to buy the Singdollar, so they will buy the Singdollar.”

“That’s actually helped in terms of boosting the market,” he added.

Refinancing activity on perpetual securities – which have no fixed maturity date – issued during the Covid-19 pandemic years, along with fresh supply from maturing five-year tenor notes issued in 2021, could also help to drive demand for Singdollar bonds in 2026.

In 2025, the Singdollar bond market reached S$30.9 billion from 146 issuances, based on data from Bloomberg, down slightly from S$31.2 billion from 127 issuances in 2024.

After 2024 and 2025, the last time the market breached the S$30 billion mark was in 2012, at S$31.1 billion from 154 issuances.

“In 2024, there were some chunky issuances, which made the overall dollar value of bonds issued higher, but the unique number of offerings (lower),” said Yeoh, referring to the broader Singdollar bond market.

“So 2025 was actually more widespread – we had more corporates, we had more diversity, we had perpetuals, we had seniors (notes), we had foreigners, locals coming to the market,” he noted, adding that it was a supportive environment for transaction volumes.

In 2025, OCBC ranked first – for the second time running – among 22 managers, with S$7.1 billion from 59 issuances, Bloomberg league table data showed, with a 23.5 per cent market share, just ahead of DBS, which had 23 per cent on S$7 billion in volumes.

Third on the list was UOB, with a 19.1 per cent market share on S$5.8 billion in volumes.

Issuances OCBC was involved in last year included Optus’ S$250 million, 3.125 per cent issuance in March, and the Singapore Management University’s S$150 million, 2.022 per cent note in July, which was the first sustainability bond from an autonomous university in the Singdollar market.

One risk that could derail his constructive outlook for 2026 would be another “Liberation Day” type of shock, said Yeoh, referring to April 2025, when the United States imposed tariffs on nearly all countries, spiking volatility across global markets.

There were “hardly any transactions” in April that year after the tariff announcement, though the Singapore market subsequently recovered after US President Donald Trump walked back some of his tariff threats.

Currently, in terms of global geopolitical tensions, it “doesn’t take a lot to set off a conflagration that could have a domino effect”, said Yeoh.

The “silver lining” is that Singapore’s safe-haven status could help to cushion some of the geopolitical shocks, but “obviously, if it’s too big that we get enveloped by all this uncertainty, then it will derail us”, he added.