Executive Summary

• In today’s Asia Chart of the Day, we examine SGD bonds issued by European and Asian financials under our coverage, and identify relative value opportunities; as SGD bonds trade on a yield basis, we compare their USD-equivalent yields after cross-currency swaps ($-yields) with their USD bonds of similar tenors and payment ranks.

• SGD issuance (excluding sovereigns, central banks, and govt agencies) reached S$ 14.7 bn YTD, up 5.7% YoY and is on track to surpass the post-COVID high in 2024 (S$ 15.7 bn); momentum in the primary market is driven by strong local demand for non-$ bonds, which supports the robust secondary performance for new SGD bonds; meanwhile, the decline in the benchmark SORA OIS curve and steady spread compression has encouraged non-Singapore issuers to print in SGD; we expect SGD bonds to remain in demand in 2026, underpinned by Asian investors’ continued interest in diversifying currency exposure.

• SGD seniors (including non-preferred): mainly from European, Asian and Middle East banks (HSBC, STANLN, SANTAN, DB, ICBCAS, SNBAB); except DB 4.4% 28, $-yields of the senior SGD bonds are higher than their comparable USD bonds; we like SNBAB S$ 3.4% 2027, which provides a 42 bp $-yield pickup against its 2027 USD bond; we have an O/P recommendation on SNBAB.

• SGD Tier-2s: European banks (HSBC, ACAFP, BNP, BPCEGP, CMZB, ABNANV, LLOYDS) and insurers (SRENVX) as well as pan-Asia insurers (AIA, PRUFIN) are active SGD Tier-2 issuers; we screen for SGD Tier-2s with $-yields above 4.5% and trading at least 30 bp wider than comparable USD bonds, and our Europrean bank analysts view their $ Tier-2s as fair or cheap; our picks include LLOYDS S$ 5.25% 2033NC28, ACAFP S$ 5.25% 2033NC28, 4.85% 2033NC28, and 4.25% 2035NC30, BNP S$ 3.125% 2032, 3.95% 35, and AIA S$ 3.58% 2035; in contrast, SGD Tier-2s from WSTP, ANZ, CMZB, ABNANV, and HSBC are unattractive, as they trade through comparable USD bonds, and we do not view their USD Tier-2s as cheap.