SingTel launches roadshows for bond issue

Presentations for what is shaping up to be Asia''s largest corporate bond offering of the year will begin on Monday.

Unlike its two most immediate predecessors - Jardine Strategic and KDB - SingTel is said to have opted for a relatively long presentation schedule, with pricing likely to take place in the middle of the week beginning November 19.

With Goldman Sachs and Salomon Smith Barney as joint global co-ordinators, the telco is still said to be hoping to raise up to $2 billion, but is likely to split the amount into different currencies and opt for a number of maturities out to 30 years. In particular, observers report that the group is actively considering whether to include a euro-denominated tranche as well as a dollar-denominated one. There is unlikely to be a Singapore dollar-denominated tranche.

The company's strategy appears to closely mirror that of OCBC Bank, which launched and closed Asia's second largest bond deal on record this July when it raised $2.14 billion through a US dollar, euro and Sing dollar offering. To achieve a large size, the distribution net was thrown as wide as possible and observers say that it makes sense for SingTel to follow suit given the large number of international telco deals in the pipeline.

Some bankers have queried why the group has chosen to access the markets relatively late in the year, when it has no pressing need for funds and might be better advised to wait until the new year. However, others state that the group is keen to take advantage of the current interest rate environment and believes Asian spreads may come under pressure over the next six to 12 months.

A rating announcement is also expected within the next couple of days and most observers conclude that the group is likely to be awarded an Aa3/A+ rating. Proceeds will be used to take-out the A$3 billion ($1.54 billion) bridge financing provided by Salomon to fund the company's acquisition of Cable & Wireless Optus earlier this year.

A final decision on the exact structure of deal is expected to formalised by the company's board today (Wednesday) ahead of a formal announcement.

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