Temasek launches 50-year SGD bonds for purchase outside the US

TEMASEK on Tuesday launched an offering of 50-year Singapore dollar bonds, following a recent round of US dollar bonds for 10, 20 and 40-year periods that were oversubscribed within a day. (see amendment note)

Temasek said the S$1.5 billion in bonds will be offered through its wholly-owned subsidiary Temasek Financial I (TFin-I) under its US$25 billion guaranteed global medium-term note programme, and will be unconditionally and irrevocably guaranteed by the Singapore investment firm.

TFin-I priced the 50-year bonds at par, with a yield to maturity of 2.8 per cent per annum, Temasek said in another statement on Tuesday night. Investors will be paid every six months.

Temasek added that there was "strong support" for the bonds from high-quality institutional, accredited and/or other specified investors based in Singapore.

The bonds are not available for purchase by US citizens or within the US.

The offering is scheduled to close on Aug 17, and the new bond is expected to be listed on the Singapore Exchange on Aug 18.

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DBS was the global coordinator for the deal; the joint lead managers and book runners were DBS, HSBC, OCBC, Standard Chartered Bank and UOB.

TFin-I intends to provide the net proceeds from the issuance of what it is calling the T2071-SGD Temasek Bond to Temasek and its investment holding companies to fund their ordinary course of business.

Ratings agencies Moody's and S&P Global have both given Temasek overall credit ratings of triple-A.

S&P Global analyst Simon Wong said he does not expect the company's capital structure will have any material subordination risks.

"The rating on Temasek reflects the company's large, well-diversified, and high-quality portfolio assets; above-average investment capabilities; and minimal leverage. In addition, we see an extremely high likelihood of extraordinary support from the government of Singapore, if needed," he said.

DBS global head of fixed income Clifford Lee noted that the 50-year bond issue shows that there is "robust investor appetite for longer-dated bonds in the SGD (Singapore dollar) bond market as it serves to satisfy the longer-term asset-liability management investment needs of the real money accounts".

OCBC credit research analyst Ezien Hoo, however, expects average corporate companies will unlikely require ultra-long tenure bonds for their day-to-day financing or refinancing needs compared to 10 to 15-year bullet bonds or perpetuals, which give issuers flexibility of whether or not to redeem given these have no legal maturity date, while perpetuals are also recognised as equity and comes with no equity dilution.

Ms Hoo said: "An ultra-long tenure bond issued by an average corporate is more akin to an equity instrument in our view, given much less visibility of what will become of the corporate over that ultra-long period of time."

"It is more likely that ultra-long bullet bonds will stay in the purview of statutory boards, government and government-linked projects and a handful of very high grade corporates," she added.

Bond analyst at Phillip Securities Research Timothy Ang also said that the bond is priced "relatively attractive to existing Temasek bonds in the market", at its final price guidance of 2.8 per cent.

Amendment note: A previous version of this article incorrectly stated the rate of over subscription for Temasek's recent US dollar bonds issue. The incorrect information has been removed.

READ MORE:

• Temasek prices US$2.5b bonds; three-tranche offering oversubscribed

• Temasek launches three-tranche offering of 10, 20 and 40-year US dollar bonds