Singapore bonds lure Schroder with Asia's sole AAA rating

by Bloomberg
04:46 AM Aug 26, 2011


SINGAPORE - Schroder Investment Management and Manulife Asset Management say they plan to buy Singapore assets, betting the city-state's top credit rating will draw funds seeking a refuge from turmoil in global financial markets.

Singapore is alone in the Asia-Pacific region in having the highest credit ratings at Standard & Poor's, Moody's and Fitch.

The United States lost its top grade at S&P's on Aug 5, spurring a sell-off that has erased more than US$7 trillion(S$8.46 trillion) from the value of global stocks in the past month.

"There's still the hunt for triple-A assets," said Mr Rajeev de Mello, head of Asian fixed income in Singapore at Schroder Investment.

"It does motivate central banks, reserve managers and sovereign wealth funds to look for triple-A assets."

Mr de Mello said he plans to add Singapore debt to his holdings.

Singapore's bonds handed investors a 6.8-per-cent return this year, second only to Indonesia among 10 local-currency debt indexes produced by HSBC Holdings.

"People would like to look at Singapore as a safe haven to a certain extent," said Mr Pang Cheng Duan, head of fixed income at Manulife Asset in Singapore.

"We still maintain the Singapore dollar will strengthen," he said, adding that Manulife plans to buy more of the currency should it weaken.

The Singapore dollar, which reached a record S$1.1992 against the greenback on July 27, has strengthened 6.1 per cent to S$1.2088 this year, data compiled by Bloomberg shows.

Mr Sim Moh Siong, a currency strategist at the Bank of Singapore, forecasts the currency will climb 3.3 per cent to S$1.17 by Dec 31.

DBS expects the Singapore dollar to end the year at S$1.19, said Mr Philip Wee, a senior currency economist at the bank.


Via: http://www.todayonline.com/Business/EDC110826-0000301/Singapore-bonds-lure-Schroder-with-Asias-sole-AAA-rating