UPDATE: Temasek proposes new five-year Singapore dollar bond, with tranche for retail investors

Sign at Temasek earnings briefingSign at Temasek earnings briefing In July 2018

Singapore’s state-owned investment company Temasek has proposed a new five-year Singapore-dollar bond offering of as much as S$500 million, with a tranche open to retail investors in the city-state for the first time.

The new T2023-SGD Temasek bond is expected to have up to S$400 million in aggregate principal, with an upsize to a maximum of S$500 million if there is an over-subscription, Temasek said in a press release.

The offer will include a placement to institutional, accredited and other specified investors, in addition to the tranche open to retail investors, the statement said.

A bookbuilding process with the institutional, accredited and other investors was expected to begin soon, with the initial interest rate guidance around 2.74 percent a year, Temasek said.

It will be issued in denominations of S$1,000, with an issue price of S$1,000, it said.

The bond will be issued via Temasek’s wholly owned subsidiary, Temasek Financial (IV), under its S$5 billion guaranteed medium-term note program established on 3 August, it said.

Temasek has been assigned an overall corporate credit rating of Aaa by Moody’s Investors Service and AAA by S&P Global Ratings, it said.

In a separate statement, Moody’s Investors Servcie said it assigned a Aaa rating to the proposed bond offering.

“Temasek’s Aaa rating reflects its strong fundamental credit profile as an investment company,” Vikas Halan, a Moody’s senior vice president, said in the statement.

“This strength is supported by its steady and recurring dividend income as well as its large and increasingly diverse investment portfolio. Furthermore, Temasek’s largest investee companies and major dividend contributors have strong investment grade credit profiles,” added Halan, who is Moody’s lead analyst for Temasek.

Moody’s noted that Temasek doesn’t guarantee the obligations of its portfolio companies and that while Temasek is government-related, Singapore’s government doesn’t guarantee its debts.

But it added that Temasek is owned by the Ministry of Finance, and with 53 percent of its portfolio denominated in Singapore dollars and 27 percent of the portfolio by underlying assets in assets in Singapore, the interests of both are “naturally aligned.”

This article was originally published on Tuesday 16 October 2018 at 11:36 A.M. SGT; it has since been updated to include comments from Moody’s Investors Service. 

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