SINGAPORE Law and Practice Contributed by: Renu Menon, May Ng, Blossom Hing, SC and Ong Ken Loon, Drew & Napier LLC
Drew & Napier LLC 10 Collyer Quay 10th Floor Ocean Financial Centre 049315 Singapore
Tel: +65 6535 0733 Fax: +65 6535 4906
Email: mail@drewnapier.com Web: www.drewnapier.com
1. Loan Market Overview 1.1 The Regulatory Environment and Economic Background
has created an environment of heightened economic uncertainty, leading to delayed investment decisions and a general slowdown in business activity, which may, in turn, weigh down lending activity. These tariffs could also have implications on the performance of Singapore’s export-driven sectors which are sensitive to global trade dynamics. In addition, ongoing trade tensions, financial or geopolitical disruptions and a broader global economic slowdown may put further pressure on Singapore’s GDP growth prospects. 1.3 The High-Yield Market The high-yield market has encouraged more compa- nies to explore issuance of bonds to secure funding resulting in an aggressive pace of debt refinancing ahead of market expectations of Federal rate cuts in the second half of 2025. The high-yield market also boosted the private credit market. Private lending has led to more competitive financing terms, faster approval processes/creditworthiness tests and cus- tomised repayment structures tailored to borrowers’ needs. However, heightened activity in private lending draws scrutiny which may result in stricter covenants and reporting requirements on companies to maintain certain financial metrics, adding operational pressure. 1.4 Alternative Credit Providers The loan market has continued to witness a rapid expansion in alternative credit providers and a more diverse financing landscape. As traditional banks tighten lending criteria due to economic uncertainties, demand for flexible financing solutions has increased. It appears that alternative lenders such as peer-to- peer platforms, fintech lending solutions and private equity firms have stepped in to fill the gap. In 2020,
In September 2025, the Federal Reserve System fur- ther lowered its benchmark rates by 25 basis points to a range of 4.00% to 4.25%, while signalling the possi- bility of two further rate cuts before the end of 2025. In July 2025, the Monetary Authority of Singapore (MAS) kept its Singapore dollar nominal effective exchange rate policy unchanged, citing earlier easing measures in 2025 still taking effect, stronger-than-expected Q2 growth, and subdued inflation. Meanwhile, the Singa- pore Overnight Rate Average followed a clear down- ward trajectory in 2025, easing local liquidity condi- tions and leading to a decline in borrowing costs. Singapore’s economy performed better than expected in the first half of 2025, with GDP growth averaging at 4.2% year-on-year, although the economic outlook for the latter half of 2025 remains uncertain given the lack of clarity over the tariff policies of the US. The authors expect the loan market landscape to generally be stability-oriented. 1.2 Impact of Global Conflicts The ongoing Russia–Ukraine war and the disruptions to key maritime trade routes in the Red Sea and Strait of Hormuz due to the escalation of conflicts in the Middle East have driven market volatility, disrupted trade, and sustained elevated funding costs. The economic outlook for Singapore remains uncer- tain through the remainder of 2025 and into 2026. The global implementation of US tariff rates in 2025
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