Temasek priced a 30-year bond on Monday afternoon New York-time, after receiving strong demand from duration-hungry US investors. The deal by the Singapore government-owned investment company comes less than a month after it raised $1.5 billion from a 10-year bond launch.
The issue came in response to reverse enquiries from up to a dozen US accounts which were keen for a long duration bond from Temasek to add to their holdings of the 10-year issue, according to sources familiar with the transaction.
That specific demand was reflected in the geographic distribution, with 71% of the Rule 144A, Reg-S issue allocated to the US, while just 15% was sold to Asian investors and 14% to Europeans. By investor type, 49% was taken by fund managers, 30% by insurance companies and pension funds, 16% by hedge funds, 4% by banks and 1% by retail and others. The total book size was $1.83 billion, and bonds were sold to 95 separate accounts.
In May, Temasek said it wanted to create a "series of different tenured bonds for a more robust and nuanced signal over the longer-term". This issue, like the 10-year deal, should set a benchmark for pricing by its affiliate companies. Temasek will use the proceeds of the sale for general working capital, it said in a statement yesterday.
This $500 million issue pays a 5.375% coupon, and was re-offered at 99.029 to yield 5.441% to a maturity date of November 23, 2039. That was the equivalent of 115 basis points over the yield of the US long bond.
Initial guidance during a very brief marketing period was 115bp to 120bp. The pricing was based on a 25bp to 35bp spread pick-up between the 10-year and 30-year bonds of recent AA and AAA issuers in the US. Temasek's 10-year notes were bid at 84bp on Monday.
In trading in Hong Kong yesterday afternoon, the new Temasek issue had tightened to 110bp-105bp, while the 10-year issue, sold at 95bp on October 20, was bid at 80bp.
The bonds, which are fully and unconditionally guaranteed by Temasek, were issued by a wholly owned subsidiary Temasek Financial (1) Ltd, under its $5 billion guaranteed global medium-term note programme. Deutsche Bank, Goldman Sachs and Morgan Stanley were joint bookrunners for the deal.
Temasek, and the issue, are rated AAA by Standard & Poor's and Aaa by Moody's.
In a report yesterday, Moody's wrote: "The Aaa rating reflects Temasek's strong financial profile at the holding company level. The rating is also underpinned by its low level of both book and market-value based leverage, its excellent liquidity position and the fundamental strength of its underlying portfolio."
