Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/226156
Title: COMMERCIAL MORTGAGE-BACKED SECURITIES: THE SINGAPORE EXPERIENCE
Authors: TAY TEE SIN ERNEST
Issue Date: 2004
Citation: TAY TEE SIN ERNEST (2004). COMMERCIAL MORTGAGE-BACKED SECURITIES: THE SINGAPORE EXPERIENCE. ScholarBank@NUS Repository.
Abstract: The primary objective of the study is to examine the feasibility and impediments of introducing Commercial Mortgage-Backed Securities (CMBS) in Singapore. From the survey findings, majority of the respondents believe that there is a need and potential for a CMBS market. They are also in favour of the proposal of setting up a SMI by the government to jumpstart a CMBS market and assist in facilitating CMBS issues. The major impediments are the lack of liquidity crunch (banks enjoy a strong liquidity position and do not see the need to securitize commercial mortgage loans to raise equity); the lack of provision of default/credit protections; the lack of demand for CMBS; the absence of a Secondary Mortgage Institution (SMI) to spearhead CMBS. These impediments may be solved by providing tax and/or financial incentives for mortgage originators to securitize commercial mortgages and the establishment of a SMI by the government. A comparison of the yield spread between mortgage originators and CMBS investors indicates that the originators' mean yield spread can satisfy 40 companies (58 percent) with yield spread ranging from less than 1% to 4%, suggesting a relatively high probability of mortgage securitization. Mortgage yield spread is also found to be highly sensitive to term structure, volatility of office price index and commercial mortgage interest rate. In recognition of the economic benefits of having a CMBS market and from the survey results, it is concluded that there is sufficient evidence and support for the establishment of a SMI to spearhead CMBS issuance and market in Singapore.
URI: https://scholarbank.nus.edu.sg/handle/10635/226156
Appears in Collections:Bachelor's Theses

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