UPDATE: Temasek-tied Astrea V private equity retail bonds begin trading

SGX ticker at Shenton Way building in Singapore; taken October 2018.SGX ticker at Shenton Way building in Singapore.

This article was originally published on Friday, 21 June 2019 at 19:44 SGT; it has since been updated to include more details. 

The S$180 million retail offering of the Astrea V class A-1 bonds began trading on SGX Friday, meeting with solid volume.

The bond price traded at a low of 1.033 and a high of 1.040, on volume of 4.76 million, according to SGX data. By comparison, Astrea 1V retail bonds had volume of 48,000.

Astrea V owns stakes in a diversified portfolio of private equity funds, which is expected to include 38 fund investments, with more than 800 underlying investment assets.

Margaret Lui, CEO of Azalea Investment Management, said the company was pleased to broaden its investor base.

“The Astrea PE Bonds, fixed income products based on cash flows from well diversified portfolios of PE funds, introduce PE funds to retail investors via a conservative investment grade structure,” Lui said in a statement Friday.

“With the strong interest in such products, we hope to be able to offer opportunities for retail investors to invest in the higher risk but higher returns classes of Astrea bonds,” she added.

Chew Sutat, executive vice president and head of equities and fixed income at SGX, said the exchange was encouraged by the strong investor interest in the offering and would continue to seek more fixed-income investments to bring to the market.

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

The retail offering of class A-1 bonds followed the placement of three classes of bonds to institutional and accredited investors: S$135 million of class A-1 bonds, US$230 million of class A-2 bonds and US$140 million of class B bonds, the statement said.

Around US$585 million on the bond proceeds have been used to repay some existing sponsor shareholder loans connected to the asset-owning companies’ acquisitions of investments in fund, Astrea V said in a separate filing to SGX Friday.

In the final rating report, Fitch rated the class A-1 and class A-2 bonds at Asf and the class B bonds at BBBsf, while S&P rated the class A-1 bonds at A-plus (sf), without rating the other two classes, according to the Friday filing. The sf stands for structured finance.

Fitch’s and S&P’s ratings levels for the class A-1 bonds 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.

Fitch’s BBBsf rating indicates good credit quality with a low default risks, but with adverse business conditions more likely to impair the ability to meet payments.

The three bond classes, including both the placement and the public offer, received valid subscriptions of US$4 billion, or a 6.7 times subscription rate for the total US$600 million worth of bonds offered, Azalea has previously said.

High quality institutions took up 55 percent of the bonds, accredited investors acquired 23 percent and retail investors in the public offer received 22 percent, Azalea has previously said.

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