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SIA's 3.03% bonds a hit with investors, upsized to S$750m
SINGAPORE Airlines' (SIA) S$500 million 3.03 per cent five-year bonds have been upsized to S$750 million following strong demand from investors.
The bond offering, the second in nine years, targeted retail investors and received a total of S$2.2 billion in orders, from both retail and institutional investors.
SIA decided to upsize the retail portion to S$450 million from S$300 million following applications worth S$526 million. The minimum size for retail investors is S$1,000. The application by retail investors closed on March 26.
The company also upsized the placement tranche to S$300 million from S$200 million after receiving continued requests from institutional investors. The minimum order for the placement tranche is S$250,000.
On March 19, SIA said the offering of S$500 million in aggregate principal amount of fixed-rate bonds maturing in 2024 may be upsized to S$750 million if there is an oversubscription.
The offer was made up of two tranches - S$200 million for the placement to institutional investors and S$300 million for retail investors.
The strong demand was already expected, given that the order book for the S$200 million placement tranche, which closed on March 19, stood at S$1.036 billion or 5.18 times subscribed.
But institutional investors continued to ask for more allocation, even as the retail applications got underway, said Clifford Lee, DBS Bank head of fixed income.
"Along the way, there was push from institutional investors to give them more," he said.
Issued in denominations of S$1,000 with an issue price of S$1,000, they will be listed on the Singapore Exchange.
SIA last issued retail bonds in 2010, which matured in 2015. That was S$150 million worth of bonds to retail investors, with a minimum subscription of S$10,000.
An SIA spokesman told The Business Times last week that it is making the latest offer to retail investors in order to diversify its funding sources and also to provide retail investors with another opportunity to invest in its bonds.
"SIA wishes to tap the retail investor market again, given that its successful bond offerings in recent years were only offered to institutional and private banking investors," the spokesman said.
The net proceeds from the offer of the retail bonds will be used for aircraft purchases and related payments as SIA is replacing older aircraft and growing its fleet with new-technology planes.
The coupon rate of the bond is 3.03 per cent, which is comparable to the yield on SIA's 3.75 per cent notes due in April 2024, which was around 3.05 per cent, prior to the announcement of the new issue.
Commencement of trading of the bonds on the Mainboard will be on March 29.
The bonds are issued under SIA's S$2 billion medium-term bond programme established on March 13. DBS is the arranger of the S$2 billion medium-term bond programme, while United Overseas Bank and OCBC Bank are the programme's dealers.
The last retail bond issuance in Singapore was in October 2018, when Temasek Holdings launched its 2.7 per cent notes due in 2023.