Temasek prices US$2.5 billion bonds; three-tranche offering oversubscribed

SINGAPORE (THE BUSINESS TIMES) – Temasek Financial I (TFin-I) has priced its US dollar three-tranche offering of 10, 20 and 40-year guaranteed bonds, which have seen strong investor support.

The wholly-owned subsidiary of Temasek has priced a US$750 million (S$1.02 billion) 10-year bond at 1.625 per cent, a US$750 million 20-year bond at 2.375 per cent and a US$1 billion 40-year bond at 2.75 per cent.

The group saw strong support for the bonds from high-quality institutional, accredited and/or other specified investors globally, Temasek said in a bourse filing on Tuesday (July 27).

Deal statistics seen by The Business Times showed that the final order book reached about US$3.75 billion from 185 accounts.

The bonds are the 22nd, 23rd and 24th bonds issued under TFin-I’s US$25 billion guaranteed global medium-term note programme.

The 10-year bond was priced at a spread of 40 basis points (bps) over the 10-year benchmark US Treasuries. Due August 2, 2031, the bond was issued at 99.423 per cent giving a yield-to-maturity of 1.688 per cent per annum.

Some 32 per cent of the demand was from fund managers, while central banks and sovereign wealth funds made up 29 per cent. The rest include private banks, pension funds and insurance firms, hedge funds and prime brokerages.

Some 39 per cent of investor interest from this bond was from the Asia-Pacific region, followed by Europe, the Middle East and Africa (EMEA) making up 34 per cent of the orders, and the remaining 27 per cent from the Americas.

The 20-year bond, which is the first 20-year Temasek bond, was priced at a spread of 65 bps over the 20-year benchmark US Treasuries. Due August 2, 2041, the bond was issued at 97.949 per cent to give a yield-to-maturity of 2.506 per cent per annum.

The bond saw the most demand from fund managers at 61 per cent, followed by pension funds and insurance firms at 12 per cent. The rest include hedge funds, central banks and sovereign wealth funds, private banks and prime brokerages.

Investor interest from Asia for this bond made up 41 per cent, while investor interest from the Americas and EMEA made up 33 per cent and 26 per cent, respectively.

The 40-year bond, also the first 40-year bond issued by Temasek, was priced at 85 bps over the 30-year benchmark US Treasuries. Due August 2, 2061, the bonds were issued at 98.825 per cent to give a yield-to-maturity of 2.799 per cent per annum.

This bond saw 44 per cent of its demand from pension funds and insurance firms, followed by fund managers making up 36 per cent of the orders. The rest included hedge funds, central banks and sovereign wealth funds and prime brokerages.

Investor interest from the Americas was at 39 per cent, followed by EMEA (31 per cent) and Asia (30 per cent).

Temasek has been assigned an overall corporate credit rating of Aaa by Moody’s Investors Service, and AAA by S&P Global Ratings. The three new bonds are each likewise rated Aaa by Moody’s and AAA by S&P.

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Temasek and its investment holding companies will use the net proceeds from the issuances to fund their ordinary course of business, it added.

The offering is scheduled to close on Aug 2 and the new bonds are expected to be listed on the Singapore Exchange on Aug 3.

The joint lead managers and book runners were Citigroup, Credit Agricole, HSBC, Morgan Stanley and Standard Chartered Bank.

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