Singapore’s global investment company Temasek Holdings returned to the offshore bond market and priced on September 29 a three-tranche offering totalling US$2.75 billion, including its longest issuance tenor so far of 50 years, which further extended its debt maturity curve.
The deal comprises a 10-year bond amounting to US$750 million, which was priced at 98.821%, with a coupon of 1% to offer a yield of 1.125%. This represented a spread of 47.5 basis points (bp) over US treasuries, or 27.5bp tighter than the initial price guidance in the 75bp area.
The second tranche was a 30.5-year bond amounting to US$1 billion, which was priced at 98.368%, with a coupon of 2.25% and a yield of 2.325%. This was equivalent to a spread of 90bp over US treasuries, or 20bp inside of the initial price range of 110bp area. The third tranche was a 50-year bond amounting to US$1 billion, which was priced at 99.292% with a coupon of 2.50% and a yield of 2.525%. This represented a spread of 110bp over US treasuries, or 25bp tighter than the initial price guidance in the 135bp area.
In its filing on the Singapore Exchange on September 30, Temasek notes the strong support for the bonds from high-quality institutional, accredited and/or other specified investors globally, across the three tranches, with the total orderbook amounting to about US$5 billion from 284 accounts. It says Temasek bonds are issued as public markers of its credit quality. They help to increase its funding flexibility and expand its stakeholder base.
In terms of geographic distribution, the 10-year tranche was sold 47% in Asia, 27% in Europe, the Middle East and Africa (EMEA), and 26% in the US. By type of investors, central banks, sovereign wealth funds and official institutions accounted for 30% of the paper, while banks bought 28%, fund managers 20%, pension funds and insurance companies 15%, private banks and securities companies 4%, hedge funds 2%, and corporates 1%.
The 30.5-year bond was allocated 45% in the US, 39% in Asia, and 16% in EMEA. Fund managers were the biggest buyers for this tranche with 48%, followed by pension funds and insurance companies with 41%, central banks, sovereign wealth funds and official institutions 4%, hedge funds 3%, banks 2%, and private banks and corporates 2%.
The 50-year tranche was largely distributed in Asia at 58%, while 33% was sold in the US and 9% in EMEA. Fund managers purchased 55% of the bond, pension funds and insurance companies 37%, central banks, sovereign wealth funds and official institutions 4%, hedge funds 2%, and private banks, securities companies and banks 2%.
The bond was issued through Temasek’s wholly-owned subsidiary Temasek Financial (I), and was drawn from its guaranteed global medium-term note programme, which was upsized this September from US$20 billion to US$25 billion.
Proceeds from the transaction will be used by Temasek and its investment holding companies to fund their ordinary course of business. Barclays, Citi, DBS, HSBC and Morgan Stanley acted as the joint bookrunners and lead managers for the deal.
Temasek last accessed the offshore bond market in November 2019 when it raised one billion euros (US$1.18 billion) in two tranches, equally split into 500 million euros each for 12 years and 30 years.