Temasek-tied private equity vehicle Astrea V to offer around US$600 million bonds

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

Temasek-tied private equity vehicle Astrea V plans to offer three classes of asset-backed bonds for a total of around US$600 million, or around S$827 million, according to a preliminary prospectus filed with the Monetary Authority of Singapore Wednesday.

The bonds will be backed by cash flows from a diversified portfolio of private equity funds and will include 38 fund investments with a total net asset value of US$1.32 billion, as of end-March, the preliminary prospectus said. As of end-December, the fund investments included 862 companies across various regions and sectors, it said.

The fund investments focus on buyout and growth equity strategies, it said.

The class A-1 bonds will have a principal amount of S$315 million, a 2024 call date and a 2029 maturity date, the prospectus said. They will be issued in denominations of S$1,000, with applications subject to a minimum of S$2,000, it said.

The expected credit rating for the A-1 bonds is Asf from Fitch and A-plus from S&P; sf stands for structured finance. The ratings levels indicate the bonds are considered high quality with a low default risk, but that they are more vulnerable to adverse business conditions than higher ratings levels.

The class A-2 bonds will have a principal amount of US$230 million (S$317.31 million), a 2024 call date and a 2029 maturity date, the filing said. They will be issued in denominations of US$200,000, it said. They are expected to be rated Asf by Fitch; there is no rating from S&P.

The class B bonds will have a principal amount of US$140 million (S$193.14 million), no call date and a 2029 maturity, it said. They will be issued in denominations of US$200,000, it said.

Fitch’s expected credit rating for the class B bonds is BBBsf, indicating good credit quality with a low default risks, but with adverse business conditions more likely to impair the ability to meet payments.

The class A-1 bonds will be offered to the public in Singapore, while the other two classes won’t be. However, the A-1 bonds won’t be eligible for Central Provident Fund (CPF) funds, or Singapore’s mandatory personal retirement funds, the filing said.

The interest rates for the bonds haven’t yet been determined.

Astrea V intends to use around US$585 million of the proceeds to partly repay loans used to acquire the fund investments, the filing said.

Astrea V is part of the Astrea Platform, which is a series of investment products based on private equity funds’ portfolios. Astrea V was launched by Azalea Group, which is wholly owned by Singapore state-owned investment company Temasek.

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