Companies are mounting smaller bond issues with shorter maturity periods, as interest rate volatility casts a shadow over the debt market this year.
Data from Bloomberg showed there have been 135 Singapore-dollar bond issues so far this year, with 36 deals or 27 per cent of them maturing in 12 months.
That is more than the 33 deals with a one-year maturity for the whole of last year. Such short-term bonds made up only 22 per cent of last year's 149 Singapore-dollar issues.
Smaller bond issues have also become more popular in the market with 54 bonds raising $50 million or less per deal, making up 40 per cent of all issues this year.
Only 37 bonds or 25 per cent of all issues last year raised sums of $50 million or less.
Most of the short-term and small bonds are issued by less well-known foreign entities, including Korea Development Bank, Bank of China (Singapore) and Bank of East Asia.
DBS head of fixed income Clifford Lee told The Straits Times that shorter-term bonds have been preferred by investors of late.
"People would want to go for yields but they're also talking about the risk of interest rates going up, so the natural inclination is to go for shorter-tenure bonds."
OCBC head of capital markets Tan Kee Phong also observed the trend of issuers opting for shorter tenures and smaller issues, which have proven to be more popular with investors.
He added: "With limited visibility over how interest rates may trend going into the later part of next year and beyond, this also helps companies manage their near-term capital requirements more effectively."
Uncertainty over the United States Federal Reserve's decision to cut its stimulus programme is behind this phenomenon of smaller bonds and shorter maturity.
Companies peg their bond's coupon rate to prevailing interest rates, though that has not been easy as interest rates have swung up and down over mixed signals from the Fed.
The US central bank flooded global markets with cheap money when it launched its US$85 billion (S$106 billion) a month bond-buying programme last year. The flush of cash kept interest rates low, enabling companies to price their bonds at cheap rates as they tapped the debt markets for their fund-raising needs.
But market speculation over the possibility of the programme being scaled back as early as September, and the eventual decision not to do so, led to the interest rate gyrations.
The Singapore dollar swap rate, for instance, went up from about 1.8 per cent at the start of the year to around 2.7 per cent now.
Longer-term bonds and larger issues have not fallen out of favour, said Mr Lee.
"For smaller, first-time issues, the 10-year space would be quite difficult. But for a strong, familiar, investment-grade name that are repeat issuers, then to go 10 years and above is still very possible."
He noted that the bulk of the big refinancing had been done last year, as companies issued bonds when the market was very stable and it was easier to price the coupon rates.
UOB head of group investment banking Ronny Chng said the bank has seen an increase in interest from investors for bonds issued by mid-size entities.
"In 2014, we expect issuance by the smaller companies to continue, albeit at a slower pace."