Euroclear and SGX to launch Orchid bond structure

Following similar initiatives in China and Japan, Euroclear teams up with the Singapore Exchange to broaden the market’s investor base.

By Jonathan Watkins

Euroclear and the Singapore Exchange (SGX) have partnered to launch an Orchid bond structure combining domestic bond issuance with global distribution channels.

The launch follows similar initiatives driven by Euroclear in Japan and China in a bid to provide issuers with direct exposure to a wider foreign investor base and access a deeper liquidity pool.

In Singapore, international investors will be able to purchase bonds issued directly on SGX’s wholly-owned subsidiary, The Central Depository (CDP) via Euroclear, and will benefit from real-time, multi-currency delivery versus payment (DVP) settlement with any counterparty within Euroclear’s network.  

SGX and Euroclear will look to extend the offering beyond Singapore to other regional issuers. 

“We are excited by the opportunities now available to Singaporean issuance and foreign investors through the Orchid bond structure which will widen the market’s investor base,” said Stephan Pouyatglobal head of capital markets and funds services, Euroclear.  

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.” 

SGX is Asia’s most global bond listing venue, having listed over 6,600 securities by more than 1,600 issuers from 66 countries with amounts issued totalling $2.2 trillion in 26 currencies.  

The addition of the Orchid bond structure allows market participants to utilise SGX as a one-stop issuance, listing and distribution platform for regional issuance. 

SGX and Euroclear were both supported by HSBC in its capacity as arranger, custodian bank and paying agent in the setting up of the Orchid bond structure. 

“Current market infrastructure must adapt to keep pace with a highly digitised and international investor community,” said Gavin Powell, head of global markets, HSBC Singapore.

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.”