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

The bond will be open for applications from retail investors from 9am on Friday.

Singapore prices inaugural 50-year sovereign green bond offering at 3.04% after 'strong' demand
A file photo showing the Monetary Authority of Singapore building. (Photo: AFP)

SINGAPORE: Singapore’s offering of sovereign green bonds with a 50-year tenor has been priced at a yield of 3.04 per cent after seeing “strong” demand from institutional investors, said the Monetary Authority of Singapore (MAS) on Thursday (Aug 4).

The S$2.4 billion bonds, called the 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 issued by the Singapore Government.

The bonds’ price and yield were announced following a day-long book building process.

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

About S$2.35 billion of the Singapore-dollar-denominated bonds were placed with institutional and accredited investors by the end of Thursday – marking the top end of the targeted issuance size.

MAS said the book-building process saw “strong investor demand”, as seen from a combined placement order book of more than S$5.3 billion, or 2.26 times the size of the amount offered under the placement.

The yield of 3.04 per cent also represented a “significant tightening of -11 basis points from the initial price guidance at the start of the book building”.

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

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

“Proceeds will be used for green projects and based on past data trends, yields on government-issued Singapore Government Securities bonds are high-quality. Furthermore, 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.

MAS deputy managing director for markets and development Leong Sing Chiong said the strong order book “affirms investors’ confidence” in the Government’s plans to build green infrastructure for a financially and environmentally-sustainable future.

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

S$50 MILLION PUT UP FOR PUBLIC OFFER

The remaining S$50 million of the green bonds will be offered to individual investors, who can start applying from 9am on Aug 5 to noon on Aug 10.

The yield of 3.04 per cent entails a coupon rate of 3 per cent per annum and a price of S$98.976 per S$100 in principal value.

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

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

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

“If investors sell the bond before its maturity date, they may receive less, or more, than their original investment, as the market price of the bond may rise or fall with changing market conditions,” it said.

Key points to note for retail investors

  • Retail investors applying for the bonds through the public offer must do so with a minimum of S$1,000 and in multiples of S$1,000.
  • When applying via ATMs and online banking platforms, select the tab that says Electronic Securities/Initial Public Offering application, instead of SGS application.
  • Each individual will only be able to submit one application. You will need an individual Central Depository (CDP) account and applications made using joint CDP accounts will be invalid.
  • Apply in cash only. Retail investors will not be able to tap on money in their Central Provident Fund or the Supplementary Retirement Scheme for applications.
  • Each application comes with a non-refundable administrative fee of S$2.
  • Allotment results will be announced on or about Aug 11. If your application is successful, the bonds will be credited to your CDP account in about two business days after the allotment date. In the event of over-subscription, the bonds will be allocated to as many individuals as possible, taking into account the distribution of valid applications.
 

The Green SGS (Infra) is part of the pipeline of up to S$35 billion of sovereign and public sector green bonds that the Government and its statutory boards will issue by 2030.

As part of the Singapore Green Bond framework published in June, proceeds from green bond issuances must adhere to guidelines and can be used for projects such as renewable energy, energy efficiency, preventing pollution and climate change adaptation.

Proceeds from the Green SGS (Infra) will be used to finance expenditure in support of the Singapore Green Plan 2030, including the Jurong Region Line and the Cross Island Line.

Source: CNA/sk(mi)