You are here
Temasek prices its longest US$1b 50-year bond at 2.5%
TEMASEK Financial (I) Limited (TFin-I) has issued below par an oversubscribed US$2.75 billion three-tranche deal of guaranteed bonds, which include a record 50-year tenor, after garnering robust interest from investors.
The wholly-owned subsidiary of Temasek Holdings priced a U$1 billion 50-year bond at 2.5 per cent, a US$1 billion 30.5-year bond at 2.25 per cent and a US$750 million 10-year bond at 1 per cent.
Across the three tranches, there was strong support for the bonds from high-quality institutional, accredited and/or other specified investors globally, said the Singapore state investment firm in a bourse filing on Wednesday.
Deal statistics seen by The Business Times (BT) showed that the final order book reached about US$5 billion - almost double the total deal size - from 284 accounts, with orders streaming in from a diverse investor base.
The 50-year issuance - Temasek's longest tenor debt yet - was priced at a spread of 110 basis points (bps) over the 30-year benchmark US Treasuries. Maturing on Oct 6, 2070, this bond was issued at 99.292 per cent, to give a yield to maturity of 2.525 per cent per annum.
For the 50-year bond, 55 per cent of demand came from fund managers, while pension funds and insurance firms accounted for 37 per cent, according to the deal statistics. The rest included central banks, sovereign wealth funds, hedge funds, private banks and securities firms.
By geography, the bulk of the investor interest - 58 per cent - for the bond originated from Asia, followed by the US with a third of the orders and Europe, the Middle East and Africa (EMEA) making up 9 per cent.
Meanwhile, the 30.5-year bond was priced at a spread of 90 bps over the 30-year benchmark US Treasuries. Due on April 6, 2051, it was issued at 98.368 per cent to give a yield to maturity of 2.325 per cent per annum.
The 30.5-year instrument was most popular with fund managers, which accounted for 48 per cent of its orders, and pension funds and insurers, which made up 41 per cent. Other participants included central banks, sovereign wealth funds, hedge funds and banks.
US investors were the most keen on the 30.5-year issuance, making up 45 per cent of the orders, followed by Asia at 39 per cent and EMEA at 16 per cent.
The 10-year bond was priced at a 47.5 bps spread over the 10-year benchmark US Treasures, and issued at 98.821 per cent to give a yield to maturity of 1.125 per cent per annum. It will come due on Oct 6, 2030, according to the term sheet seen by BT.
For the 10-year note, about three in 10 of the orders came from central banks, sovereign wealth funds and official institutions, while 28 per cent were from banks, based on the deal statistics. Fund managers subscribed for about a fifth, and pension funds and insurers accounted for another 15 per cent.
By geography, Asia investors piled into the 10-year issuance with almost half of the orders originating from the region. This was followed by EMEA and the US at nearly 30 per cent each, the deal statistics showed.
Unconditionally and irrevocably guaranteed by Temasek, the three tranches are the 19th, 20th and 21st bond issues under TFin-I's US$25 billion guaranteed global medium-term note programme.
The offering was launched on Tuesday. "Temasek plans proactively for a long dated and well distributed debt maturity profile and avoids large debt repayment obligations in any one year. We assess market conditions and take into account investor feedback along with our own requirements when looking at potential issuances," a Temasek spokesperson said in response to BT's queries on the longer debt.
Temasek bonds are issued as public markers of Temasek's credit quality, helping to increase its funding flexibility and expanding its stakeholder base, the investment firm said on Wednesday.
Temasek has been assigned an overall corporate credit rating of Aaa by Moody's Investors Service and AAA by S&P Global Ratings.
The three new bonds are each likewise rated Aaa by Moody's and AAA by S&P.
Temasek and its investment holding companies will use the net proceeds from the issuances to fund their ordinary course of business.
The offering is scheduled to close on Oct 6. The new bonds are then expected to be listed on the Singapore Exchange on Oct 7.
The joint lead managers and bookrunners for the deal were Barclays, Citigroup, DBS, HSBC and Morgan Stanley.
Temasek last sold bonds in November 2019, when TFin-I's 12-year and 30-year notes, each sized at 500 million euros (S$803.6 million), drew strong demand from investors.