HDB's S$500m bond deal last week makes it the biggest issuer in SGD market

HDB last week sold a S$500 million 12-year bond despite poor market sentiment.

It was also the third bond issue so far this year by HDB - the nation's public housing body - and the longest maturity.

The S$500 million, 12-year bonds were issued under its S$32 billion multicurrency medium-term note programme.

They are rated Aaa by Moody's Investors Service.

In January and March, HDB had sold two issues - S$515 million, 10-year and S$600 million, five-year respectively. Including last week's sale, the HDB has raised S$1.615 billion on the local bond market and is the biggest issuer of Singapore dollar bonds so far this year.

In 2017 and 2016, the HDB sold S$3.32 billion and S$5.275 billion worth of bonds respectively.

Second-largest issuer in 2018 is the Land Transport Authority of Singapore which has done three issues worth S$1.5 billion.

Fixed-income markets have been facing uncertainties on several fronts, encompassing investor concerns about monetary policy tightening, rising interest rate expectations due to inflation, geopolitical disagreements and trade tensions between countries, said Pee Beng Kiong, OCBC Bank head of bond syndicate.

OCBC handled the HDB sale.

Notwithstanding HDB's bumper issues, the overall SGD bond market remains in the doldrums. Year-to-date volume of S$7.77 billion from 42 issues is down 30 per cent.

In the current environment, fixed-income bankers have to be nimble in tapping windows of opportunity to get deals through.

The OCBC team "identified improved investor sentiment on the back of dovish signals from the US Federal Reserve in its May FOMC minutes, which were released last Wednesday, and we swiftly recommended a launch strategy to HDB on Thursday in the early morning," said Mr Pee.

"HDB, in partnership, was able to move nimbly and in the process caught the positive uplift in investor sentiment to access the market for its longest-dated bond issue of the year," he added.

Unlike other bond sales where the marketing process starts with a price guidance which is then finalised depending on orders received, OCBC told the market the coupon would be fixed at 3.08 per cent from the beginning.

"The coupon rate for the transaction was fixed at 3.08 per cent for investors to have pricing clarity and enabled them to accurately reflect their interest," he said.

"With HDB's credentials, including its top-notch credit profile, the order book was readily subscribed with orders from a diverse range of investors, allowing HDB to further meet its long-term funding needs for this year," said Mr Pee.

OCBC has also previously handled HDB's 12-year and 15-year bond issues over the past two years.