UPDATE: Temasek prices 500M euros of 12-year bonds and 500M euros of 30-year bonds amid strong demand

Euro coinsPhoto by Leslie Shaffer

This article was originally published on Thursday, 14 November 2019 at 8:40 A.M. SGT; it has since been updated to include comment from S&P Global Ratings. 

Temasek Holdings’ wholly owned subsidiary Temasek Financial priced 500 million euros of 12-year bonds at 0.50 percent and 500 million euros of 30-year bonds at 1.25 percent amid strong demand, Singapore’s state-owned investment company said in a filing to SGX Thursday.

The 12-year bond due 2031, called the T2031-EUR Temasek bond, was priced at a spread of 40 basis points over the 12-year benchmark EUR mid-swap, with investors to be paid annually at the coupon rate of 0.5 percent, the filing said. The T2031-EUR Temasek bond will be issued at 98.742 percent of face value, giving a yield-to-maturity of 0.609 percent a year, Temasek said.

The 30-year bond, called the T2049 Temasek bond, was priced at a spread of 80 basis points over the 30-year benchmark EUR mid-swap, with the coupon rate of 1.25 percent to be paid annually, the filing said. The bond will be issued at 98.348 percent of face value to give a yield-to-maturity of 1.317 percent a year, Temasek said.

“We are pleased that both our T2031-EUR and T2049-EUR Temasek Bonds were over-subscribed, attracting strong demand from high-quality investors globally,” Leong Wai Leng, Temasek’s chief financial officer, said in the statement.

“As public markers of our credit quality, our Temasek Bonds have helped increase our funding flexibility and expand our stakeholder base,” she added.

The offering is set to close on 20 November, Temasek said.

The T2031 Temasek bond and the T2049 Temasek bond are the 17th and 18th bond issues under Temasek Financial’s US$20 billion guaranteed global medium term note program, the filing said.

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

Separately, S&P said its rating reflected Temasek’s “large, well-diversified and high-quality portfolio assets, above-average investment capabilities, minimal leverage, and our view of an extremely high likelihood of extraordinary support from the government of Singapore (unsolicited rating AAA/Stable/A-1+) in case of need.”

But S&P added, Temasek’s portfolio has an increasing proportion of unlisted assets, which weighs on the net characteristics of the portfolio. As of end-March, Temasek’s net portfolio was valued at S$313 billion, S&P noted.

Moody’s said in a separate statement Wednesday that it assigned ratings of Aaa to the proposed bonds, with a stable outlook.

‘”Temasek‘s Aaa rating reflects its strong fundamental credit profile as an investment company. This strength is supported by its steady and recurring dividend income as well as its large and increasingly diverse investment portfolio,” Vikas Halan a Moody’s senior vice president, said in the statement. “Furthermore, Temasek‘s largest investee companies and major dividend contributors have strong investment grade credit profiles.”

Halan, who is Moody’s lead analyst for Temasek, said the investment company was expected to keep its net borrowings at below 5 percent of the market value of the portfolio.

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