Singtel launches digital sustainability bond in tie-up with UOB and ADDX

Singtel retail outlet at Tiong Bahru PlazaSingtel retail outlet at Tiong Bahru Plaza; photo taken pre-Covid

Singtel has priced a US$100 million five-year sustainability-linked digital bond, in a tie-up with UOB and digital exchange ADDX, the three companies said in a press release Wednesday.

The entire sustainability-linked bond will be tokenized on ADDX’s platform, on which digital, or tokenized, bonds are issued using blockchain and smart contract technology to eliminate manual process, such as issuance, custody and distribution, the release said.

Frederick Chin, head of group wholesale banking and markets at UOB, said the bank is seeing increased interest from clients seeking to digitalize their assets.

“Singtel’s move to tokenise its entire US$100 million sustainability-linked bond issuance shows that like-minded issuers are keen to tap the benefits of blockchain technology for greater security and smart contracts for better efficiency,” Chin said in the statement. “UOB is committed to collaborating with industry partners such as ADDX to support our corporate clients to draw on this space for their fund-raising needs.”

Sustainability targets

Arthur Lang, Singtel’s group chief financial officer, said the bond shows the telco takes its sustainability commitment seriously.

In addition, “through technologies such as blockchain, we hope to pave the way to democratise funding, giving a more diverse group of investors the opportunity to participate in Singtel’s growth, and supporting the digitalisation of our financial ecosystem.”

UOB is the lead manager for the issuance, the release said.

Bond framework

Under the sustainability-linked bond framework, Singtel has committed to reducing its greenhouse gas emissions (GHG) by 2025, compared with its 2015 baseline, the release said. If the target isn’t met, Singtel will make additional investments into green efforts of at least 0.25 percent of the bond’s principal amount, the release said.

The notes have a U.S. dollar fixed-coupon rate of 3.56 percent per annum, with maturity in April 2027, the release said, adding the proceeds will be used to fund Singtel’s ordinary business. After hedging, the effective Singapore-dollar interest rate will be less than 3 percent per annum, the release said.

The bond will be issued under Singtel’s wholly owned subsidiary Singtel Group Treasury (SGT) via the S$10 billion euro medium-term note program, the release said.

Temasek Backing

Since being licensed by the Monetary Authority of Singapore (MAS) as a private market exchange in early 2020, ADDX has listed at least 26 deals on the platform. The deals have included Investcorp, UOB, CGS-CIMB and entities owned by Singapore state-owned investment company Temasek Holdings, such as Mapletree, Azalea and SeaTown. ADDX hosts asset classes including private equity, venture capital, private debt, real estate, hedge funds, cryptocurrency-exposed funds and structured products, the release said.

The exchange, which is owned and operated by ICHX Tech, raised US$50 million in a series A round at the beginning of 2021. Its investors include SGX, Temasek subsidiary Heliconia Capital, and Japanese investors JIC Venture Growth Investments (JIC-VGI) and the Development Bank of Japan (DBJ). Other shareholders include South Korea’s Hanwha Asset Management, Japan’s Tokai Tokyo Financial Holdings and Thailand’s Kiatnakin Phatra Financial Group.