MAS proposes cutting insurers' capital charges on core infrastructure and senior securitisations

The Monetary Authority of Singapore (MAS) has proposed lowering the capital that insurers hold against qualifying infrastructure and senior securitisation investments, in Consultation Paper P018-2026 on the Capital Treatment for Securitisation and Infrastructure Investments for Insurers, published on 2 November 2026. The largest change falls on senior, investment-grade securitisations backed by assets other than loans: for tranches that qualify as Senior Category 1, the loading applied to the credit spread risk charge would fall from 300 per cent to 25 per cent.

Chee Hong Tat, who is Minister for National Development and also MAS's Deputy Chairman, announced the package at the Singapore International Reinsurance Conference on the same day, together with a S$30 million Infrastructure Capability Development Grant for Insurers funded by the Financial Sector Development Fund. The grant took effect on announcement and is meant to cover part of the cost of hiring dedicated investment teams, training existing staff and paying for professional services as insurers set up or expand infrastructure investment in Singapore. Comments on the capital proposals are due by 18 December 2026.

For loan-backed securitisations, senior investment-grade tranches that fully meet MAS's simple, transparent and comparable (STC) criteria would carry no loading, against 50 per cent today, and senior investment-grade tranches that fall short of those criteria would carry 25 per cent. That 25 per cent, for both kinds of senior tranche, drops to zero when an MAS-licensed fund manager runs the deal, the special purpose vehicle is domiciled and structured in Singapore, and a shorter list of STC-like criteria is met. A non-debt securitisation counts as Senior Category 1 only if it is rated A or above, diversified across sectors, aimed at cash-generating assets, protected by liquidity buffers and run by a sponsor and manager with a long record. The paper's own worked example shows the starting point: an A-rated private equity securitisation with a ten-year duration attracts a credit spread charge of 58 per cent of market value under the current loading, a level the industry told MAS can be prohibitive.

Because the zero loading requires a Singapore vehicle and an MAS-licensed manager, the full benefit goes to structures originated and managed in Singapore.

As risks become larger, more interconnected and more complex, the next phase of the insurance industry's development must be about translating its scale into even deeper capacity and stronger capabilities.

Chee Hong Tat, Minister for National Development and Deputy Chairman, Monetary Authority of Singapore

On infrastructure, investment-grade rated debt that meets the qualifying criteria would receive credit spread risk adjustment factors 20 per cent below those for rated corporate bonds of the same credit quality and term, the discount unrated qualifying infrastructure debt already enjoys; debt rated below investment grade gets no relief. For a new category of seasoned, core operational assets, the discount on qualifying debt, rated or unrated, would widen to 25 per cent, and the equity risk charge would fall from 35 per cent to 30 per cent in developed markets and from 40 per cent to 35 per cent in emerging markets. To qualify, at least 75 per cent of revenues must come from availability-based, regulated or long-term contracted arrangements without material exposure to merchant prices or demand, and at least 75 per cent of contracted revenues must come from the Singapore Government, a statutory board, or an investment-grade sovereign, public-sector or private counterparty.

MAS declined the industry's request to benchmark such equity to real estate, saying it found insufficient evidence that infrastructure equity is as stable as direct property. Even so, for qualifying assets in developed markets the proposed charge would match the 30 per cent property risk charge. The proposals build on RBC 2 revisions that took effect on 31 March 2026, and MAS will also recognise more external credit assessment institutions with infrastructure and securitisation expertise while developing standard disclosure templates, assessment guidance and fund-manager declarations with the industry. Mr Chee told the conference that past studies put infrastructure at around 1 to 2 per cent of insurers' assets.

For insurers, the capital arithmetic shifts most in two places: senior securitisations of private assets, which have carried a 300 per cent loading, and contracted infrastructure equity, which would now cost the same capital as property. Because the zero loading requires a Singapore vehicle and an MAS-licensed manager, the full benefit goes to structures originated and managed in Singapore.