Up to Date with Rates
• The Federal Reserve cut rates by 25bps for the third and final time this year, citing a weakening US labour market. Looking ahead, Powell reiterated that the Fed would remain data-dependent, highlighting that a Fed cut is undecided for its January meeting. Meanwhile, market participants still expect at least two 25bps rate cuts for 2026 (as of 17 December 2025). The Fed also announced it will implement a new T-Bill purchasing program to facilitate the smooth operation of money markets. For more details, check out our recap of the Fed meeting here.
• In Europe, the ECB kept its three main policy rates unchanged. With the ECB revising upward some of its growth and inflation projections, it is unlikely in our view that there will be further rate cuts in the near term.
• In the UK, the BOE cut rates by 25bps to 3.75%. The decision reflected subsiding inflation (3.2% in November), led by cooling prices and a softer labour market. Looking ahead, the BOE is guiding for a more gradual pace in rate reduction, depending on the inflation outlook.
• In Japan, the BOJ is highly expected by market participants to hike interest rates by 0.50% to 0.75% on 19 December 2025, due to elevated inflation (2.9% in November). With a slowing economy, market participants are currently (as of 19 December 2025) not expecting any rate hikes in the near term.
• For the period from 28 November 2025 to 15 December 2025, the 2-year Singapore Overnight Rate Average-Overnight Index Swap (“SORA-OIS”) increased by 7.6 basis points to 1.53%, the 5-year SORA-OIS increased by 17.83 basis points to 1.93% and the 10-year SORA-OIS increased by 18.8 bps to 2.24%. Overall, this continues the recent trend of higher yields for the medium tenors, in line with major non-US rates.
• Over the same period, yields for both the 6-month and 1-year SGD T-bills remained the same, at 1.33% and 1.28%. The 5-year Singapore Government Securities increased by 12 bps to 1.86%, while the 10-year Singapore Government Securities increased by 15 bps to 2.17%.
• In the recent 6-month T-bills auctions, the bid-to-cover ratio were at a low, consistently trending downwards below 2.03x levels over the past few auctions. Cut-off yields regained some ground in the latest 4 December 2025 auction, which saw rates increase slightly to 1.41%.
2026 Playbook: Bonds to Watch
SGD Issues:
TMGSP 5.500% 31May2028 Corp (SGD)
TMGSP 4.650% 29Oct2029 Corp (SGD)
These TMG bonds offer an estimated YTM of around mid-3.0%, which is one of the higher-yielding SGD fixed-rate bonds in the 3–4-year tenor. While this likely reflects TMG’s more levered profile, we remain comfortable with the issuer. We think both the 2028 and 2029 issues are attractive for investors seeking higher yield in the SGD space and are comfortable with a slightly levered profile.
Thomson Medical Group (TMG) is a healthcare services provider with operations across Singapore, Malaysia (TMC Life Sciences Berhad), and Vietnam. In FY2025 (ended 30 June 2025), TMG saw steady contributions from its core operations, alongside full-year contributions from its Vietnam business (acquired recently). However, one-time non-cash goodwill impairment led to earnings turning negative. More recently, in 1Q2026 (ended 30 September 2025), TMG’s Malaysian operations saw profits increasing 47.0% YoY due to contributions from Oncology, and reduced discount to corporate customers at Thomson Hospital Kota Damansara. This reinforces our thesis that TMG would see gradual earnings recovery (check out the related article below), supporting an eventual recovery in its credit profile.
IREGLB 6.000% 22May2028 Corp (SGD)
IREIT’s 2028 bonds offer an attractive 4.1% YTM, ranking among the highest within the SGD fixed-rate bonds universe – a good option for high-yield seeking investors. The REIT’s recent successful refinancing of its €200.8 million facility, with maturities extended to July 2029, reinforces credit comfort for bondholders.
IREIT Global is a pure-play Western Europe REIT (office/retail across France, Germany and Spain). The latest reported 1H2025 results saw gross revenue of €26.6 million, down 27.5% YoY and operating cash flow of €7.8 million, down 74.3% YoY. That said, this was due to lower contribution from its Berlin properties, given enhancement works which we view as temporary in nature. In its 3Q2025 update (ended September 2025), IREIT reported steady portfolio metrics, with occupancy at 89.0% (excluding Berlin Campus), near-full rent collection (99.0% rents paid), alongside 4.0% rental escalation YTD.
Overall, we are comfortable with IREIT’s credit profile despite the recent softer revenue. In our view, credit metrics have moderated but remain sound, with manageable leverage and interest coverage, and we do not expect any issues in servicing upcoming maturities within the bond’s tenor.
BNP 5.250% 12Jul2032 Corp (SGD)
While BNP has several attractive SGD-denominated bonds available, our preference is the BNP 5.250% 12Jul2032 Corp (SGD) with 1.6 years to call. At an estimated YTC of 2.6%, these issues offer a decent yield pickup versus similarly rated (S&P and Fitch ratings: BBB+ / A-)., short-term bank bonds.
BNP Paribas (BNP) is a top-tier French bank with a diversified global franchise. We view BNP’s credit profile as comfortable, underpinned by its 3Q2025 (ended 30 Sep 2025) performance, with steady net income growth of 6.1% YoY to €3.04 billion. The bank also has healthy capital buffers with a Common Equity Tier 1 (CET1) ratio at 12.5% (above the 10.51% regulatory minimum), and a moderate non-performing loan (NPL) at 1.7%. At the same time, liquidity and funding position remain healthy, with a net stable funding ratio (NSFR) and liquidity coverage ratio (LCR) at 117.0% and 138.0% respectively (both above the 100% regulatory minimum). Overall, these support a comfortable debt-servicing capacity.
MoneyMax’s bonds offer yields of around 4.7%, placing them among the most attractive in the SGD fixed-rate universe. We believe the bonds offer good value, particularly if MoneyMax’s fundamentals improve as gold prices remain firm. We recommend these bonds for SGD yield-hunters who are comfortable with the risks associated with the gold and pawnbroking industries.
These bonds are issued by Money Max Treasure Pte. Ltd. (the financing vehicle) and guaranteed by parent MoneyMax Financial Services Ltd. MoneyMax is a regional pawnbroking and secured-financing leader, operating 100+ outlets across Singapore and Malaysia, with steady growth driven by its Malaysia expansion. In 1H2025 (ended 30 Jun 2025), the Group reported solid financial performance, anchored by the appreciation in gold price which we expect to support MoneyMax’s profit momentum in 2H25. Overall, the Group’s credit profile remains stable, supported by recent strong financial performance.
BPCEGP 5.000% 08Mar2034 Corp (SGD)
BPCEGP 4.600% 21Jan2035 Corp (SGD)
We like BPCE’s 2034/2035 Tier 2 issues with yield-to-call of above 3.2%, at an estimated 3-4 years to call, providing decent yield pickup compared to similarly rated BBB+ bonds in the same tenor bucket. We also believe BPCE’s Tier 2 bonds provide a decent yield pickup relative to other Tier 2 banking bonds with comparable years to call.
As France’s second-largest banking group, BPCE continues to maintain a stable credit profile. The 3Q2025 results (ended 30 Sep 2025) highlighted that profitability remains firm with net banking income rising 9.0% YoY to €6.4 billion). Additionally, BPCE has also reported strong capital buffers with the CET1 ratio at 16.4% (above the 10.59% regulatory requirement), while asset quality remains stable with an NPL ratio of 2.7%. Furthermore, BPCE also reported healthy liquidity and funding position with NSFR of 106.89% and LCR 148%.
USD Issues:
LGENSO 5.375% 02Jul2027 Corp (USD)
LGCHM 2.375% 07Jul2031 Corp (USD)
LGENSO 5.375% 02Jul2027 Corp (USD) and LGCHM 2.375% 07Jul2031 Corp (USD) are investment grade bonds with offer appealing yield-to-maturity of 4.3% to 4.5%. Considering the respective tenors, we think these issuances offer an attractive yield pickup against similar investment grade peers. These issuances will be suitable for investors looking for higher-quality, stable income.
LGCHM 2.375% 07Jul2031 Corp (USD) is issued by LG Chem, which is South Korea’s largest integrated chemicals group, with diversified exposure across batteries, petrochemicals, and advanced materials. In 9M2025 (ended 30 Sep 2025), operating profit surged 36% YoY to KRW 1.6 trillion, signalling a profit recovery which can potentially support debt servicing. We think credit profile remains stable despite the recent uptick in leverage. Management has recently planned to sell KRW 2.0 trillion of LGES shares to repay loans which can help reduce gross leverage.
LGENSO 5.375% 02Jul2027 Corp (USD) is issued by LG Energy Solution (LGES) which is LG Chem’s listed battery subsidiary. It manufactures EV and energy-storage batteries for global automakers and OEMs (e.g., Tesla, GM, Ford, Volkswagen/Audi) as well as energy storage systems (ESS) customers. In 3Q2025 (ended 30 Sep 2025), the Group reported stronger operating profit of KRW 601.3 billion (3Q2024: KRW 448.3 billion) and a 10.5% operating margin. We are comfortable with its credit profile as metrics appear stable while 2025 capex is guided to fall 20-30%, supporting cash flow moving forward.
HSBC 8.113% 03Nov2033 Corp (USD)
HSBC 4.619% 06Nov2031 Corp (USD)
HSBC is a stable issuer with several attractive bonds outstanding. We spotlight the HSBC 4.619% 06Nov2031 Corp (USD) and HSBC 8.133% 03Nov2033 Corp (USD) issues for their attractive carry, with estimated YTCs of 4.6% and 5.1%, and 4.9 years and 6.9 years to call, respectively. Compared with bonds issued by its higher-rated bank bond peers, these bonds provide a better yield while letting investors lock in yields over the medium term.
HSBC’s credit profile remains stable in our view. For 3Q2025 (ended 30 Sep 2025), the Group reported decent profitability with profit before tax (excluding one-off legal items) rising 3.0% YoY to US$9.1 billion. Additionally, HSBC maintains a healthy capital buffer with a CET1 ratio of 14.5% (above the 11.2% regulatory requirement), while credit provisions remain contained. Finally, funding and liquidity remain firm, with an NSFR of 144% and an LCR of 193%, underpinned by a strong deposit base, supporting its stable credit profile.
BNKEA 5.125% 07Jul2028 Corp (USD)
BNKEA 6.750% 27Jun2034 Corp (USD)
For investors seeking high-yield IG-rated bank issues, these BNKEA issues stand out. These bonds offer roughly 4.5% and 5.2% YTC, with 1.5 and 3.5 years to call, respectively. Importantly, they offer decent yield pickup compared to larger peers such as Standard Chartered. In our view, they are a compelling option for investors seeking attractive, risk-adjusted exposures.
Bank of East Asia (BEA) is one of Hong Kong’s largest banks, with earnings largely driven by net interest income (around 70+% of total operating income). In 1H2025 (ended 30 Jun 2025) results, the bank delivered total profit growth of 14.0% YoY despite a choppy growth backdrop in China and Hong Kong. Meanwhile, the Group’s capitalisation remains robust, with a CET1 ratio of 23.7% (peer-leading), supported by a stable retail funding base. Furthermore, strong liquidity and funding base - NSFR and LCR of 124.6% and 176.5% respectively -and improving asset quality keep us comfortable with the credit profile.
BBVASM 5.125% 18Jan2033 Corp (USD)
Investors with a higher risk appetite can consider BBVA’s bonds for their high 6.1% YTC, with roughly 2.1 years to call. These bonds offer attractive carry for yield-seeking investors. The issuer, BBVA Mexico (BBVA), is investment-grade with a stable outlook.
BBVA Mexico (BBVA), is Mexico’s leading bank by deposits. While its bonds are issued by “BBVA Bancomer Texas”, the credit is primarily driven by Mexico-based operations under Mexican regulation. In 9M2025 (ended 30 Sep 2025) results, BBVA reported net income growth of 5.2% YoY to MXN $74.2 billion, while maintaining a robust capital position, with a CET1 ratio of 16.3% (above the 8.5% regulatory requirement). At the same time, we think asset quality remains sound, with a modest NPL at 1.7%, while liquidity and funding are also healthy, with NSFR and LCR at 127.7% and 154.1% respectively.
FWDGHD 5.252% 22Sep2030 Corp (USD)
FWDGHD 7.635% 02Jul2031 Corp (USD)
FWD’s bonds, particularly FWDGHD 5.252% 22Sep2030 Corp (USD) and FWDGHD 7.635% 02Jul2031 Corp (USD), present attractive investment-grade options, offering attractive low to mid 5% YTM for bond investors. These bonds provide attractive carry within the USD investment-grade universe, making them compelling for investors seeking exposure to an issuer with an improving credit profile.
Founded in 2013 by Richard Li, FWD is a Hong Kong-based insurance group operating across major Asian markets. In 1H2025 (ended 30 Jun 2025), FWD reported a record interim net profit of US$47.0 million, supporting its internal capital build. Meanwhile, 3Q2025 (ended 30 Sep 2025) showed continued momentum in new policy sales.
The Group holds a conservative investment portfolio (83% fixed income of which 96% are IG rated). Meanwhile, the liquidity position remains stable, with capital strength continuing to build. The Group posted a solvency ratio of 283% (above the 100% regulatory minimum) while leverage has declined post-1H2025 IPO, supporting an improvement in FWD’s credit profile.
Recent announcements
• 16 December – City Development Limited (CDL) announced the divestment of Quayside Isle in Sentosa Cove for S$97.3 million as part of its capital recycling program.
• 15 December – ESR-REIT announces a proposed divestment of eight non-core properties, for S$338.1 million. We view this as credit positive with the projected reduction of aggregate leverage from 42.8% to 39.2%, expanding debt headroom to a projected S$1,114.0 million post-transaction. Interest coverage ratio is also expected to rise from 2.5x to 2.6x.
• 11 December – CapitaLand Investment announces the closing of its second onshore sub-fund, China Retail RMB Fund I, at RMB1.0 billion and seeds it with CapitaMall Xinduxin as it seeks to recycle capital and improve capital efficiency while growing recurring fee income.
• 11 December – Keppel REIT is announcing a non-renounceable preferential offering, expected to raise gross proceeds of S$886.3 million, to partially fund (94.5% of consideration) the acquisition of an additional one-third interest in Marina Bay Financial Centre Tower 3. The other 5.5% of purchase consideration will be funded by additional debt of S$51.2 million with an interest cost of 2.2%, bringing the REIT’s blended interest cost to 3.3% per annum. Aggregate leverage is expected to decline 0.3pp to 41.9% post-acquisition and after receipt of proceeds from the preferential offering.
• 11 December – MoneyMax launched its unsecured commercial paper in the form of digital security tokens, which was met with overwhelming demand (S$74 million raised compared to a range of S$50 to S$70 million).
• 11 December – OUE REIT announced a new S$100,000,000 unsecured facility to finance its working capital and general corporate funding, as well as to refinance the group’s unsecured loan facilities.
• 10 December – Olam Group Limited announced its wholly owned subsidiary, Olam Food Ingredients (“ofi”), has secured a multi-tranche dual currency (USD & CNH) term loan facility aggregating US$1,120 million. This facility is guaranteed by Olam Group Limited which would subsequently be transferred to ofi post-ipo and demerger. Proceeds will be used to refinance ofi’s existing loans and general corporate purposes.
• 9 December – Singapore Post Limited (Singpost) announced an increase in rate for all regular domestic mail by ten cents, with Standard Regular Mail and Standard Large Mail now costing S$0.62 and S$0.90 respectively. This move is expected to fund service improvements.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in TMGSP 5.500% 31May2028 Corp (SGD) and TMGSP 4.650% 29Oct2029 Corp (SGD). The analyst who produced this report holds NIL positions in the abovementioned securities.
