SGX unit to issue zero coupon guaranteed convertible bonds due 2024

AN indirect wholly-owned subsidiary of the Singapore Exchange (SGX) is seeking to raise around 240 million euros (S$386 million) from zero coupon convertible bonds, to refinance its existing debt and for other corporate purposes.

SGX Treasury I intends to issue the bonds, which will mature in 2024, to institutional and other investors. The bonds will be convertible into ordinary shares in SGX, and are guaranteed by SGX, said the bourse in a regulatory filing on Monday evening.

Approximately 80 per cent of proceeds from the deal will be used to refinance SGX's existing debt, while around 20 per cent will be used for general corporate purposes.

Terms of the convertible bonds will be confirmed upon the pricing of the issue, which is expected to take place on or about Monday, it said. The closing date for the issue is expected to be on or around March 1, and is conditional upon the in-principle approval of the Monetary Authority of Singapore.

"Convertible bonds issued by SGX-listed companies are relatively rare," said Ezien Hoo, credit research analyst at OCBC Bank. However, with equity markets in favour, it is likely that other corporates may attempt to come to market with a convertible bond, she added.

Recent issuers of convertible bonds include Singapore Airlines and Banyan Tree Holdings.

"Typically, a compelling equity story would be needed for investors to be happy to take a lower coupon rate... Ultimate actual demand from investors for SGX's convertible bonds would depend on the terms; in this case, the conversion price," Ms Hoo told BT.

Credit Suisse and Morgan Stanley Asia have been appointed as the joint global coordinators and bookrunners for the issue.

SGX shares closed at S$9.92 on Monday, up S$0.02 or 0.2 per cent, before the announcement.