SG Morning Highlights | UOB Sydney Branch to Issue A$100 Million of Floating-Rate Senior Unsecured Notes

Advancers / Decliners is 59 to 70, with 73.32M million securities worth S$70.42M million changing hands.

Analysts suggest that the Monetary Authority of Singapore's proposal to allow REITs to take on more debt will likely increase the attractiveness of the country's REIT market, the second largest in Asia. By raising the gearing ratio limit from 45% to 50% and lowering the interest coverage ratio (ICR) to 1.5 times, REITs in Singapore will gain more flexibility for growth and debt refinancing. Wong Xian Yang from Cushman & Wakefield noted that these changes are especially relevant given the rising cost of debt, allowing REITs to pursue more opportunities while showcasing financial strength. The Singapore REIT market, valued at US$75.8 billion in 2023, was the only top-three market to experience growth, highlighting its resilience.

The new regulations are expected to enhance investor confidence by emphasizing prudent borrowing and capital management. However, lower ICR thresholds may challenge REITs with gearing ratios of 45% or less, requiring adjustments to borrowing strategies. Despite potential challenges, the revised rules are seen as beneficial, particularly for REITs nearing financial limits, such as Lendlease Global Commercial REIT. Analysts from DBS predict these changes will introduce more financial flexibility for Singapore REITs in a challenging interest rate environment, positioning them advantageously for acquisitions as rates decrease. REIT managers are encouraged to monitor interest expenses and ensure robust financial systems to meet the new requirements.