NEA raises S$1.65b from maiden green bond issuance under S$3b MTN programme
SINGAPORE'S National Environment Agency (NEA) has raised S$1.65 billion worth of green bonds in a dual-tranche issuance after pricing the first and second series of its S$3 billion multicurrency medium term note (MTN) programme the night before.
This was announced on Tuesday by DBS, the sole arranger for NEA's multicurrency MTN programme and adviser for the agency's green bond framework.
The issuance comprised S$350 million in 10-year fixed rate notes as well as S$1.30 billion in 30-year fixed rate notes with coupons of 1.67 per cent and 2.5 per cent, respectively. Interest on both series is payable semi-annually in arrears.
This marks NEA's longest tenor green bond denominated in SGD to date as well as the longest tenor unrated public green bond in South-east Asia, said the bank in its media statement. It also marks the largest inaugural bond issuance by a Singapore statutory board.
Clifford Lee, DBS global head of fixed income, noted that the "confident and robust" take-up of the green bonds indicates that the market is "ready to throw its support behind Singapore's sustainable development plans".
"Investors are also signalling that sustainable infrastructure development will give Singapore a competitive advantage and are willing to invest in industry initiatives that bring long-term gains," said Mr Lee.
"The strength of this issuance is a watershed moment as it demonstrates that investors will respond positively when there is a trusted standard for issuers and investors to rely on, in this case the NEA Green Bond Framework. This in turn will contribute towards Singapore's ambitions of becoming the green finance capital of Asia and the world," he added.
In particular, Mr Lee highlighted that the 30-year fixed rate notes series were priced at the top end of DBS's expectations.
"The fact that they reached 2.5 per cent for 30-year notes' inaugural issue shows strength of the market reception to NEA's green bond transaction. This morning the bonds were all trading slightly up, which shows that the market really took to it as a green bond issued by an organisation that embodies green, social and sustainability (GSS) principles," he said separately in an interview with The Business Times (BT) on Tuesday.
Based on data provided by DBS, the combined final order books stood in excess of S$2 billion from mostly asset managers and agencies (90 per cent), followed by banks (9 per cent) and private banks (1 per cent).
Some 98 per cent of demand came from Singapore. A remaining 2 per cent comprised investors in other geographies including Hong Kong and Brunei, which Mr Lee believes is an encouraging indicator for broader-based participation in future green bond issuances.
On the whole, he noted interest from traditional investors, green and sustainability investors, as well as those with portfolios that "need to be filled up with very clear, green, sustainable bonds."
The main problem, in his view, is a current lack of supply when it comes to green financing - particularly out of Singapore, where he notes there is much potential.
Citing the success of South Korea's Korea Housing Finance Corp's social bonds as one example, Mr Lee believes Asia's investor market is hungry for truly sustainable bonds, and that NEA's maiden green bond launch is just scratching the surface.
"The market has so much appetite and attention for such transactions (GSS financing), we should leverage this current situation to do more," he told BT.
The latest round of funds raised by NEA will go into financing the agency's development of sustainable waste management infrastructure - starting with the Tuas Nexus waste management facility, Singapore's first integrated facility to treat incinerable waste, source-segregated food waste and dewatered sludge.
NEA chief executive Luke Goh said he expects the facility to significantly boost Singapore's resource management capabilities upon its completion.
"The strong reception to the public sector's first green bond affirms investors' confidence in Singapore's sustainable development efforts. We are encouraged by the strong market demand and range of investors that subscribed to NEA's green bonds," commented Mr Goh.
READ MORE: NEA launches S$3b medium-term note programme to finance sustainable waste management projects
