Credit Brief on Singapore SMEs Q2 2020
This is a quarterly report jointly published by the CRI at the Risk Management Institute of National University of Singapore and Validus Capital. Read the full report here →
Overall, the NUS-CRI 1-year PD decreased during Q2 2020, from 53.74bps in March to 35.31bps in June. The credit profile of Singapore SMEs improved despite the GDP contraction of 12.6% in Q2 2020 based on advance estimates from the Ministry of Trade and Industry (MTI).
This difference is reconcilable in view of Singapore opening up from its strict series of containment measures. The stringent yet effective approach towards Covid-19 has availed individuals and firms-alike confidence and optimism. Coupled with prompt and extensive aid from local institutions, a great deal of liquidity and cash flow have been made available to struggling local SMEs across all sectors.
The Monetary Authority has taken it upon themselves to ensure that the market is well endowed with both SGD and USD. On Mar 2020, a new MAS USD Facility has been set up to provide over USD 60bn of funding. The central bank also worked with local banks to avail flexibility of debt deferment and lower cost of funding to fuel existing operational costs and/or efforts to digitize. Both of which are vital for uplifting the SME’s balance sheets and keeping them competitive in the long run.