Bank of America has become the latest international institution to take advantage of favorable conditions in the Singapore debt market, launching a S$100 million ($57.3 million) corporate bond via JP Morgan.
The 10-year notes carry a fixed rate coupon of 4%, payable on a semi-annual basis. Offered in denominations of S$250,000 the bonds were sold at a discounted issue price of 99.82% to give the issue a clean coupon of 4%. The transaction was rated Aa2 by Moody's Investor Service.
The deal offers a slight yield pick-up over a 10-year transaction issued last week via Deutsche Bank for Jackson National Life Insurance Company of the US. The $100 million deal was priced at par with a coupon of 3.92%.
Market observers comment that Bank of America's deal was fully subscribed at launch, with insurance companies taking up the majority of the paper. One further argues that appetite for longer-dated deals in Singpore is not surprising in the current market environment.
"Absolute rates you can get are so low, so that's why there is a lot of issuance about," the official says. "Investors want this kind of high-quality paper as well, because otherwise they have to move right down the credit curve to find higher absolute yields."
