NEW SINGAPORE FINANCIAL MARKET SET TO OPEN
The new Singapore government
securities market will start trading in late April or early May
after President Wee Kim Wee signs the Development Loan Bill
approved by parliament last week, bankers said.
    But the new market is unlikely to attract many overseas
investors, particularly as non-residents will be subject to a
withholding tax on interest earned, Loh Hoon Sun, general
manager of <Overseas Union Bank Ltd>, said.
    Overseas Union Bank Ltd is one of the five primary dealers
approved to underwrite the auctions and ensure liquidity.
    The Monetary Authority of Singapore (MAS), which approved
the five underwriters, aims to issue seven billion dlrs of
treasury bills, notes and bond issues in the first year.
    A MAS spokesman said a steering committee has yet to
determine details, but most of the new government securities
will have a maturity of up to five years and 10-year paper may
be issued if demand emerges. Bonds and treasury bills will be
issued in denominations of 1,000 dlrs and treasury bills in a
minimum denomination of 10,000 dlrs.
    Bankers said these rates will put the securities within
reach of almost everyone and will create a more active market.
    Allocations will be made first for non-competitive bids
from primary dealers prepared to accept average yields on up to
500,000 dlrs worth of notes and bonds and an unlimited volume
of treasury bills. The remainder will be awarded to competitive
bidders offering the lowest yields.
    The new market should stimulate the local economy. Funds
will come from savings and fixed deposit accounts, "but just how
much will depend on the bond yields," Loh told Reuters.
    Loh said bank interest rates currently stand at 3.0 to 3.5
pct for fixed deposits and the prime rate is 5.5 pct, and these
rates are expected to remain fairly steady this year.
    An act of parliament passed last week granted the Singapore
authorities permission to raise 35 billion dlrs in the new
market over the next four years.
    Trading will be computerised and scripless.
 REUTER
