Singapore to offer Asia Pacific’s first end-to-end digital infrastructure for fixed income

Marketnode – the digital assets joint venture (JV) set up by Singapore Exchange (SGX) and Temasek – has partnered with fixed income (FI) issuance and data firm Covalent Capital (Covalent) to build Asia Pacific’s first end-to-end digital infrastructure in the fixed income space. The news follows the JV announcement by SGX and Temasek on 22 January. As part of the partnership, Marketnode will acquire a minority stake in Covalent.

Marketnode will tap on the accelerated need to digitalise and optimise workflows to meet demand for capital in Asia, starting with FI. FI is defined as the types of investments that yield fixed interest or dividend payments until their maturity dates. The partnership is poised to consolidate primary FI workflows as bond issuances continue to grow in Asia ex-Japan, where G3 primary issues have grown 46% to US$387 billion over the last two years, totalling more than 800 new issues in 2020 with more than 450 issuers and 200 arranger banks. G3 issues are those denominated in three major currencies, namely US dollars, Japanese yen, and Euros.

Marketnode and Covalent will work together to streamline the listing, straight-through processing and settlement of bonds and activities in bond-lifecycle management. Marketnode will connect Covalent’s flagship OMAS platform, a data, book-building and allocations tool, with SGX’s listing, post-trade and asset servicing capabilities. This will enable the Asian bond market to benefit from a one-stop listing, issuance and lifecycle management platform.

The development builds on SGX, Temasek and HSBC’s digital bond collaboration, which saw Olam International’s inaugural digital issuance in August 2020 and subsequent return with an additional S$250 million digital issuance in January 2021.

Lee Beng Hong, Senior MD, Head of Fixed Income, Currencies and Commodities (FICC), SGX, said, “Covalent is an ideal partner for us given its focus on the syndicated bond market, where there is a critical need for digitalisation to meet the needs of issuers, buy-side institutions and service providers. This is a significant step towards building an issuance-to-settlement platform that addresses all of their infrastructure needs.”

Pradyumna Agrawal, MD, Blockchain@Temasek, said the organisation sees the transformative potential of end-to-end digital asset solutions for financial transactions. He said, "Bringing together core capabilities and insights across the organisations involved will help deliver greater and more meaningful impact as we continue to digitalise and innovate across our capital markets infrastructure.”

Lim Cheng Khai, Executive Director (Financial Markets Development Department) of the Monetary Authority of Singapore, added, “Digitalisation and automation will lead to higher level of efficiencies, market transparency and information availability for all industry participants including banks, investors and issuers. MAS welcomes SGX, Temasek and Covalent’s partnership to build the first end-to-end digital infrastructure supporting the digitalisation of fixed income markets in Asia.”

Sanjay Garodia, CEO at Covalent Capital, said, “We are really excited to take the joint product to stakeholders involved in the capital markets space from issuers and law firms to underwriters and investors. The investment by SGX and Temasek validates the need for a holistic solution to the legacy infrastructure which currently supports the burgeoning market.”