Singapore prices inaugural 50-year green bond offering at 3.04% on ‘strong’ demand

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SINGAPORE: Singapore’s 50-year green government bond offering is priced at a yield of 3.04 percent after seeing “strong” demand from institutional investors, the Monetary Authority of Singapore (MAS) said on Thursday (Aug. 4) ).

The S$2.4 billion bonds, called Green Singapore Government Securities (Infrastructure) or Green SGS (Infra), mark the country’s first issuance of sustainable debt.

With a maturity date in 2072, this is also the first 50-year bond to be issued by the government of Singapore.

The price and yield of the bonds were announced after a one-day bookbuilding process.

So-called “books” are built by banks, or the appointed bookrunners, as they take orders. The bookrunners for this were DBS Bank, Deutsche Bank, HSBC, OCBC Bank and Standard Chartered Bank.

By the end of Thursday, approximately S$2.35 billion of the Singapore dollar-denominated bonds had been placed with institutional and accredited investors – marking the high end of target issuance size.

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MAS said the book-building process saw “strong investor demand,” as evidenced by a combined order book for placements in excess of S$5.3 billion, or 2.26 times the size of the amount tendered under the placement.

The 3.04 percent return also represented a “significant tightening of -11 basis points from the initial price guidance at the start of bookbuilding.”

MAS added that the bonds are placed with “a diverse mix of high-quality institutions”.

Experts who spoke to UKTN earlier on Thursday had expected strong interest from institutional investors.

“Proceeds will be used for green projects and based on past data trends, returns on Singapore Government Securities government-issued bonds are of high quality. In addition, the green bonds are backed by the government and without a maximum investment amount,” said Ms Cherine Fok, director of sustainability services at KPMG Singapore.

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Leong Sing Chiong, MAS’s deputy director for markets and development, said the strong order book “confirms investor confidence” in the government’s plans to build green infrastructure for a financially and environmentally sustainable future.

The extension of the government bond yield curve to 50 years will also further develop the Singapore dollar bond market and support longer-dated corporate issuances, he added in the press release.

S$50 MILLION HISTORY FOR PUBLIC LISTING

The remaining S$50 million of the green bonds will be offered to individual investors, who can apply from August 5 at 9 a.m. to 10 a.m. at noon.

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The 3.04 percent yield implies a coupon rate of 3 percent per annum and a price of S$98,976 per S$100 in principal.

MAS said it “retains the discretion to offer unallocated bonds from the public offering to institutional investors”.

In its press release, the central bank urged retail investors to carefully review the details of the bond product and assess whether the risk return and characteristics of long-term bonds meet their financial needs.

It added that all investments in Singapore Government Securities “involve market risk”.

“If investors sell the bond before maturity, they may receive less or more than their original investment because the market price of the bond may rise or fall as market conditions change,” the report said.

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