Clifford Capital sold a $300 million five-year guaranteed note on Tuesday, the first ever dollar bond guaranteed by the Singapore government that managed to price at the tightest end of the spread.
The Reg S senior unsecured note had an initial price guidance of Treasuries plus 57bp-60bp, and received a final guidance of Treasuries plus 53bp-55bp. The bond ended up pricing at the tighter end of the spread at 53bp above Treasuries, indicating strong demand for a rarely offered AAA-note, according to a source close to the deal.
“The issuance was successful as rates are super low right now and credit markets are very supportive,” said the source. “It got priced at the tightest spread for Asian issuers in the US dollar realm in more five years and is also at one of the lowest ever coupons in dollar out of Asia.”
Clifford Capital’s paper – which has a coupon of 1.625% - was compared to Temasek’s 2019s, which were trading at Treasuries plus 85bp-88bp at the time of pricing. This indicates that the Singapore-based finance company’s note priced approximately 35bp inside Temasek’s outstanding paper in secondary levels.
“Clearly the deal received an aggressive pricing despite the debut nature of the transaction,” added another source.
Ten-year US Treasury yields declined toward a three-month low of 2.48% ahead of data economists say will show inflation slowed in the last five months and companies added fewer jobs.
Federal Reserve policymakers will complete a two-day meeting today at which they are forecast to maintain $85 billion of monthly debt purchases, according to a Bloomberg survey of economists.
Clifford Capital’s transaction received an order book in excess of $1 billion from 48 accounts. Asian investors subscribed to 84% of the papers, while the rest went to European investors, according to a term sheet.
Financial institutions bought 43% of the notes, followed by fund managers with 25%, central banks and insurers at 18% as well as corporates and others at 14%.
In secondary markets, Clifford Capital’s notes were trading 3bp-4bp tighter, highlights a source.
In order to make use of favourable credit conditions, other borrowers are also interested in accessing global capital markets.
Korea East-West Power, rated A1/A+, has mandated Bank of America Merrill Lynch, Citigroup, Credit Suisse, HSBC and UBS to arrange a series of fixed-income investor meetings in Asia, Europe and the US commencing during the week of November 4. A 114a/Reg S deal may follow subject to market conditions.
Cofco (Hong Kong) is also set to go on a roadshow from today, which may lead to a Reg S dollar-denominated offering, subject to market conditions. The company has mandated HSBC, JPMorgan and UBS as joint global coordinators for the meetings in Hong Kong, Singapore and London.
Additionally, China Citic Bank International plans to meet investors this week to discuss a possible dollar bond sale.
Clifford Capital is a project finance company backed by the Lion City’s state investor Temasek and set up by the finance ministry.
DBS, HSBC and Standard Chartered were joint bookrunners of Clifford Capital’s deal.
This article was amended to reflect the fact that the bond is the first ever issue by Clifford Capital.
