Temasek to sell S$1 billion of bonds to fund business

February 8, 2010
Singapore Democrats

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Shelley Smith & Katrina Nicholas

Temasek Holdings Pte., Singapore’s state-owned investment company, plans to sell S$1 billion ($704 million) of 10-year bonds to fund operations.

Temasek unit Temasek Financial Ltd. will sell the bonds, which will be issued under the Singapore state-owned investment company’s $10 billion global medium-term note program, Temasek said in an e-mailed statement today. The program limit was doubled on Feb. 3 “to cater for the possibility of future issues,” according to the statement.

The notes may be priced to yield between 40 basis points and 45 basis points more than the Singapore swap offer rate, according to two people familiar with the matter who declined to be identified before a public announcement. The bonds will be priced as soon as today, the people said.

“Temasek has a close nexus with the Singapore government and is a premium triple A paper,” Nancy Koh, director of Asian corporate research with BCP Securities Asia Ltd., said in a phone interview from Singapore. “I shouldn’t think Temasek will have a problem selling these bonds, even though current market conditions have increased investors’ risk aversion.”

Moody’s Investors Service ranks Temasek’s debt at Aaa, its highest investment-grade rating, while Standard & Poor’s grades its bonds an equivalent AAA.

“Strong” profile

The rating “reflects Temasek’s strong financial profile,” Moody’s senior credit officer, Elizabeth Allen, wrote in an e- mailed note to clients. “Temasek’s objective of maximizing long-term shareholder returns allows it to have a flexible investment strategy and investment horizon.”

Proceeds from the sale will be used by “Temasek and its investment holding companies to fund their ordinary course of business,” today’s Temasek statement said.

Temasek sold S$300 million each of 20- and 30-year notes priced to yield 4 percent and 4.2 percent respectively in November, according to a Dec. 7 e-mailed release from the company. The bonds were yielding 4.319 percent and 4.109 percent today.

Temasek hired Australia & New Zealand Banking Group Ltd., DBS Group Holdings Ltd., HSBC Holdings Plc and Standard Chartered Plc to manage the sale, according to a person familiar with the matter.