John Hancock - the global insurance company - has re-entered the Singapore dollar bond market with the issuance of a S$150 million bond. The five year deal marks the second time that John Hancock has issued in Singapore dollars after the company did a similar $150 million, five year deal in July 1999. Both deals are underwritten and lead managed by Citicorp Investment Bank (Singapore).
Today's deal was issued at par and carries a coupon of 4.40%. This equates to a 60 basis point (bp) spread over the relevant five year Singapore Government bond and a 20bp spread over the relevant swap. Compared with the most recent Singapore dollar bonds, this bond gives investors slightly more yield. Earlier this month, a statutory board - the Housing and Development Board (HDB) - issued a five year bond with a coupon of 4.198% which came in at 4bp under the swap. John Hancock is rated one notch lower than the HDB at AA+ by S&P and AA2 by Moody's. The HDB is rated triple-A by both agencies.
Speaking at the launch of the deal, Ronald McHugh, vice president of John Hancock Life Insurance Company said, "the Singapore dollar bond market appears poised to provide on going funding opportunities for foreign issuers." John Hancock will swap the proceeds out of Singapore dollars and into US dollars before remitting the proceeds overseas, as they are obliged to do under MAS Regulation 757. Citibank is the swap counter party.
One potential challenge for the issuer and the lead managers was that local insurance companies are some of the biggest buyers of Singapore dollar bonds. The last time John Hancock sold a Singapore dollar bond, the Citicorp sales team had to put a lot of effort into persuading the local insurance companies that they were not funding the operations of a competitor. This time, according to sources, the sales process was much smoother.
