Singa Secured Assets Ltd.
Diane Lam, CFA, Hong Kong (852) 2533-3522

S$2 billion asset-backed short-term notes


Preliminary rating as of May 16, 2000
    This presale report is based on information as of May 18, 2000. Subsequent information may result in the assignment of a final rating that differs from the preliminary rating.
Issue Preliminary rating*
Short-term notes A-1
*The rating is preliminary and subject to change at any time.


Expected closing date: June 6, 2000

Program: Up to S$2 billion asset-backed short-term note program.

Collateral: Loans and bonds originated by Development Bank of Singapore Ltd.

Final Note Maturity Date: June 2005, unless a program termination event occurs.

Issuer: Singa Secured Assets Ltd., a Singapore-based special-purpose vehicle.

Originator/Seller: Development Bank of Singapore Ltd.

Corporate service provider: Bermuda Trust (Singapore) Ltd.

Liquidity provider/Servicer: Development Bank of Singapore Ltd., Singapore Branch.

Approved swap counterparty: Rated ‘A+’, as applicable

Account bank: Development Bank of Singapore Ltd., Singapore Branch.

Issuing and paying agent: Development Bank of Singapore Ltd., Singapore Branch.

Trustee: Dexia Trust Services Singapore Ltd.                        


The preliminary ‘A-1’ rating assigned to Singa Secured Assets Ltd.’s (Singa) short-term note program is based on:


  • A pool which shall include no more than 10 obligors at any given time;
  • The creditworthiness of the obligors, assessed by Standard & Poor’s to be at least of ‘A+’ or jointly ‘A’ and ‘A-1’ quality or better;
  • The credit quality of any swap counterparty, as applicable;
  • 100% committed liquidity facility provided by the liquidity lender, Development Bank of Singapore Ltd. (DBS Bank; A+/Stable/A-1), and subject to drawdown conditions;
  • Mitigation of obligor setoff risk provided by the originator, DBS Bank;
  • Mitigation of commingling risk provided by the servicer, DBS Bank;
  • Cash flow management for the program executed by the servicer, which will ensure sufficient funds to meet the liabilities of the special-purpose vehicle (SPV), Singa, in a timely manner;
  • A cash reserve to mitigate negative carry risks associated with prepayments;
  • The bankruptcy-remote nature of Singa; and
  • The transfer of assets under Singapore’s legal and regulatory regime through true sale of either bonds (by way of transfer) or loans (by way of equitable assignment) from DBS Bank to Singa.

The preliminary rating on the program is dependent on Standard & Poor’s assessment of the obligors’ creditworthiness as well as that of DBS Bank in instances where structural risks are deemed to be mitigated by the bank to a level appropriate for the program’s ‘A-1’ rating. The program’s rating is subject to change commensurate with downward adjustments in the ratings of any of the above parties and, as applicable, to the rating of any swap counterparty.

The program is the first rated asset-backed notes program originating out of Singapore, and the first Singapore securitization deal to be rated by Standard & Poor’s. As such, the deal represents an important step forward in opening the Singapore market to rated securitization transactions.

This type of program provides the bank with a flexible alternative form of funding for a book of high quality assets. DBS Bank has led the development of structured notes in Singapore through several landmark transactions involving commercial properties. With this program, DBS Bank has once again expanded the horizons of Singapore’s debt capital markets by creating an innovative product for Singapore investors, including retail investors.      

Originator Overview

Incorporated in 1968 by the Singapore government, DBS Bank is a global and diversified banking group engaged in a wide range of commercial banking and financial services. DBS Bank operates the most extensive branch and ATM network in Singapore. In 1998, the bank became the country’s largest commercial bank through the S$1.6 billion acquisition of Post Office Savings Bank and Credit POSB Pte. Ltd. from the government. The bank has also completed several acquisitions in Asia to expand its commercial banking operations in the region. As of December 1999, DBS Bank and its subsidiaries had consolidated assets worth S$106.3 billion, including S$54.4 billion in customer loans, S$82.3 billion in customer deposits and S$10.2 billion in shareholders’ funds.  

Credit Risks

All of the designated assets to be transferred to Singa will have been originated by DBS Bank under the bank’s standard credit practices and procedures. The assets will be selected based on specified eligibility criteria, including rating criteria appropriate to support an ‘A-1’ program rating. Obligors in respect of loans or bonds may be Singapore statutory boards, government linked corporations and other domestic and foreign domiciled entities assessed by Standard & Poor’s to be at least of ‘A+’ quality or jointly ‘A’ and ‘A-1’ quality or better.

The program is unique in that it will have exposure to no more than 10 distinct obligor risks. The small and concentrated nature of the obligor pool means that statistical default assumptions cannot be applied. Instead, Standard & Poor’s has applied the "weak-linked" concept in assigning its preliminary rating to the program, and will base the program’s rating on the weakest rating in effect at any time among the obligors. Consequently, the deal requires no further credit or programwide enhancement. Standard & Poor’s will either privately assess or assign a public rating on the creditworthiness of each obligor.    


The special-purpose vehicle, Singa Secured Assets Ltd., is a Singapore-based entity formed solely to issue asset-backed short-term notes. The proceeds of the notes will be used to purchase the designated assets. There will be a clean sale of the loans and the bonds to the special-purpose vehicle. The noteholders, together with the liquidity lender and other secured parties, will benefit from the following security:  

  • Assignment of rights, title, and interest to the collateral assets;
  • First fixed charge over the bonds and all of the issuer’s other investments;
  • First fixed charge over all of the issuer’s bank accounts; and
  • First floating charge over all of the issuer’s assets.

As servicer of the program, DBS Bank will continue to administer the portfolio. Funds collected from loans will be placed into the originator’s collection account and will be subsequently swept into the SPV’s account. Funds collected from bonds will be remitted directly to the SPV’s account. All accounts will be held at DBS Bank’s Singapore Branch or at an eligible bank with a short-term rating of ‘A-1’ or better.

The servicer acts on behalf of the SPV. The servicer is responsible for managing the cash flow of the SPV to ensure timely settlement of all liabilities incurred by the SPV in accordance with the transaction documents. Duties of the servicer include arranging the purchase of appropriate yield-earning assets, arranging timely funding under liquidity lines and timely repayment of the notes, determining issuance and pricing on the notes, and arranging the disbursement of funds in accordance with the program. Other duties include calculating the negative carry reserve, ensuring that this reserve is replenished as required, account reconciliation, and other reporting.

The program is structured with note issuance tests, which among others include:


  • Program limit test;
  • Asset sufficiency test;
  • Liquidity availability test;
  • Tenor tests; and
  • Program rating maintained at ‘A-1’.

Credit Support

Standard & Poor’s will continuously monitor the credit risk associated with the designated assets and with all parties relevant to this transaction. The program’s preliminary ‘A-1’ rating is based on the risk of the obligors in the pool and the ratings of all other dependent parties. The program’s rating will be dependent on the lowest rating of all dependent parties and may in the future be revised to reflect any change in the risk profile of the dependent parties. Furthermore, the program will terminate if any designated asset should default. The program will also terminate if Singa becomes insolvent, or if the liquidity line ceases because asset value is insufficient to support the principal on outstanding notes and those amounts drawn under the liquidity facility to refinance notes and/or to purchase assets. Standard & Poor’s assesses these two situations as being highly remote in line with the program’s! preliminary ‘A-1’ rating.

When the program terminates, or upon any occurrence of an event of default for the notes, the trustee will enforce claims and liquidate the collateral. Proceeds from liquidated assets will be distributed to secured parties in accordance with the provisions and in the priority set out in the debenture.

Other structural risks.

The originator, DBS Bank, will cover the risk of obligor setoff. Reserves to size commingling risk are not required, as commingling risk is appropriately addressed through the rating of the servicer, DBS Bank. Lastly, prepayment by any designated asset may lead to a situation of negative interest carry, when the assets fail to generate sufficient funds to cover the payment of liabilities and fees on the notes. This risk will be mitigated through a cash reserve.  

Liquidity Facility

A S$2 billion committed facility will be provided by DBS Bank, as liquidity lender, which is subject to drawdown conditions. This facility may be used to refinance outstanding notes and the interest due on such notes at their maturity. It will not be used to cover credit defaults on the collateral pool. Liquidity may also be used to fund the purchase of new assets or to pay certain expenses, provided that the requirements of the liquidity availability test are met.

Liquidity can be drawn upon if same day notice is given, provided that the draw-down meets certain requirements, including a collateral test, and that the SPV is solvent. Standard & Poor’s assesses these two situations to be remote to an ‘A-1’ level.    

Cash Flow Analysis

All monies received by the servicer from collections and principal repayments under the designated assets will be deposited in the SPV’s account. The servicer will manage the cash flows of the SPV, and is responsible for making disbursements and for ensuring that SPV liabilities are met in a timely manner in accordance with the documents. When funds are due prior to enforcement, the servicer shall ensure that funds sufficient to cover any negative interest carry are remitted to a reserve ledger, after which monies will be distributed in the following order and to the extent they are due to the relevant parties:


  • a.

Any income taxes payable by the special-purpose vehicle;  

  • b.

Trustee fees, costs, expenses and indemnities;  

  • c.

Corporate service provider fees, expenses, and indemnities;  

  • d.

On a pari passu basis, payments of any costs, charges, liabilities, expenses, or indemnities incurred by the SPV under the transaction documents;  

  • e.

Payments to swap counterparties, as applicable  

  • f.

On a pari passu basis, interest and sums (other than principal payable) under the liquidity facility, and all amounts of interest and sums (other than principal) due under all series of notes;  

  • g.

On a pari passu basis, all principal amounts payable under the liquidity facility, and all principal amounts due under all series of the notes;  

  • h.

The payment of any purchase price of designated assets coming due;  

  • i.

On a pari passu basis, the purchase of outstanding notes at par plus accrued interest;  

  • j.

The servicer as a variable servicing fee and which is due and payable annually.  

Legal Risks

The issuer is established as a Singapore special-purpose entity and meets Standard & Poor’s criteria as such. This includes provisions limiting the issuer’s scope of activity, mandating the appointment of independent directors, and placing restrictions on debt issuance. Standard & Poor’s has reviewed the legal and tax opinions provided in connection with this transaction.

A security rating is not a recommendation to buy, sell, or hold securities and may be subject to revision, suspension, or withdrawal at any time by Standard & Poor’s. Standard & Poor’s expects to assign the ratings indicated above on the closing date. However, the final rating is subject to receiving complete documentation and satisfactory legal opinions.    

Copyright 2000, Standard & Poor's Ratings Services

Published by Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. None of such Information may be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use for any such purpose, in whole or part, in any form or manner, or by any means whatsoever, by any person without Standard and Poor's prior written consent.

Information has been obtained by Standard and Poor's from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Standard and Poor's does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for! the results obtained from the use of such information.

Standard and Poor's receives compensation for ratings obligations. Such compensation is based on the time and effort to determine the rating and is normally paid either by the issuers of such securities or by the underwriters participating in the distribution thereof. The fees generally vary from $2,500 to $100,000. While Standard and Poor's reserves the right to disseminate the rating, it receives no payment for doing so, except for subscriptions to its publications.