PE-backed bonds: innovating for income

Azalea's issuances of Astrea bonds for retail investors have held up well

Genevieve Cua

Published Mon, Feb 22, 2021 · 05:50 AM

INCOME from lower-risk investments is a highly prized attribute, but it is elusive. As at mid-December an estimated US$18 trillion of government debt is negative yielding globally, of which investment grade debt's share is 27 per cent.

As central banks' monetary and fiscal policies around the world are expected to remain accommodative to cushion the economic shock wrought by Covid-19, investors particularly pre-retirees and retirees are forced to consider higher-risk investments.

One Singapore institution, Azalea Asset Management of the Temasek group, has sought to enable access to private equity investments for the retail public - in the form of coupon-bearing bonds.

The firm has an ongoing programme of issuance of PE-backed bonds. While there was no issuance in 2020, it is reasonable to expect that the pipeline…