S'pore firms' debt surge in 2024: sustainable or a risky gamble?

Rise in debt reflects rebound in economic activity but some warn it warrants closer scrutiny

- Kang Wan Chern

Companies in Singapore borrowed more to fund their businesses in 2024, taking advantage of favourable conditions and stronger investor appetites.

The corporate debt market grew in 2024, with new debt issuances jumping 34 per cent year on year to $308 billion, the Monetary Authority of Singapore (MAS) noted in an Aug 8 report.

Short-term non-Singdollar debt with maturities of one year or less led the surge, making up almost 60 per cent, or $182 billion, the largest segment of new corporate borrowings.

Growth in Singdollar bond issuance was broad-based across financial institutions (FIs), corporates and statutory boards, supported by favourable interest rates as well as tighter credit spreads, meaning the extra interest investors demand for lending to riskier borrowers has become smaller, showing they see those borrowers as safer.

Corporates, including property companies, issued $4.1 billion more in Singdollar debt than a year earlier, while statutory board issuance rose $6.1 billion. Analysts said the increases reflected both a rebound in economic activity and the continued attraction of Singapore's debt market.

While the share of Singdollar issuance by FIs fell 9.9 per cent year on year, they were particularly active in the non-Singdollar market, where their share rose 23.7 per cent and issuance volumes jumped $92 billion. Debt was issued in a range of currencies, including US and Australian dollars, British pound, euros, yuan and Hong Kong dollars, to fund business needs.