* Sustainability bonds likely to prove tough sell for yield-hungry Singapore investors
By Daniel Stanton and Kit Yin Boey
SINGAPORE, April 10 (IFR) – The International Bank for Reconstruction and Development, or World Bank, is exploring a potential issue of retail bonds in Singapore to boost interest in sustainable development bonds and tap the affluent population.
In a briefing to potential investors last Tuesday, the multilateral institution said it was working with arranger DBS to find a suitable structure for a retail bond offering.
“It might not be in Singapore dollars,” said George Richardson, director in the capital markets department at the World Bank treasury. “It could be in another currency. That’s a discussion we are having with DBS.”
The World Bank has been looking at selling Sustainable Development Goals bonds, which support the UN drive to end poverty, protect the planet and ensure prosperity for all.
Last month, it raised 163 million euros from the sale of SDG bonds of 15 and 20 years to institutional investors in France and Italy. The return on investment is directly linked to the performance of stocks in the Solactive SDG World Index, which comprises 50 companies deemed to dedicate at least one-fifth of their activities to sustainable products or to be leaders in related issues. The bonds are also capital protected.
However, the World Bank may not be able to sell such bonds to its intended target market in Singapore, as only plain vanilla structures are allowed.
“At the moment, regulations prevent retail from purchasing those,” said Richardson. “Private wealth can, but ‘retail retail’ can’t.”
He said the bank was discussing with the Monetary Authority of Singapore about a potential exception for the instruments, given that the principal…