Fund management companies are the primary bond investors in Singapore. Private asset management companies, licensed banks, and insurers are also important investors in the market.

Principal investors in the debt market include fund management companies, such as the Government of Singapore Investment Corporation and the Central Provident Fund; private asset management companies; licensed banks; and insurers. Retail investors are also encouraged to participate.

There are no restrictions on foreign investors owning government or corporate bonds. However, bonds issued by an unrated foreign entity may only be sold to sophisticated investors (as defined under the Companies Act).

Pension Funds

The Central Provident Fund (CPF)—a government-managed retirement scheme—dominates the country’s pension funds industry. Under the CPF investment scheme, no restrictions apply to CPF’s foreign-currency and cross-border investments. The total of all members’ account balances, as of 1Q 2008, was SGD139.8 billion.

Insurance Companies

The insurance industry is an important source of financing in Singapore. As of the end of 2007, the total assets of insurance companies reached SGD128.8 billion. Insurance companies are allowed to place funds in various investment instruments, including bank time deposits, equities, central-bank debt issues, mortgage loans, and direct investments, among others. They are also allowed to make offshore investments, but these should total no more than 20% of their total assets.

Asset Management Companies

Singapore recognizes the importance of developing its asset management industry as part of its overall plan to enhance its status as an important financial hub.To develop the asset management industry, the Government encourages statutory boards and state-managed firms to tap the asset management industry for their excess funds. In 2002, the restriction that investment instruments under the CPF Investment Scheme be denominated in Singapore dollars was relaxed. Fund management companies no longer have to set up SGD-denominated feeder funds for their global funds.

To encourage more market participants, entry requirements for foreign entities wishing to set up as investment managers have also been reduced. Minimum shareholders’ funds are set at SGD100 million, while minimum global funds managed by a parent company are set at SGD100 billion.