Martin Lee @ Sg
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NTUC Bonds Red Hot

NTUC Income’s first issue of 15-year bonds was so keenly taken up that there was a 15 times over-subscription for the $600 million offer.

The 15-year bond comes with a coupon rate of 3.65% p.a.

While the bonds have a maturity of 15 years, NTUC Income has the option to redeem the notes in full at the end of 10 years.

I am actually quite surprised that NTUC has taken to issuing bonds. As an insurance company, their main problem (or opportunity) is deploying their capital to work efficiently. Currently, interest rates are so low in Singapore that whenever there is a S$ bond issue, the demand will be very high. And one huge source of demand has been insurance companies as they seek to invest the “premiums” from policyholders.

As it turns out, other than fund management companies, banks and private banks, another group of subscribers of the NTUC bond were in fact other insurance companies.

It will be interesting to know what NTUC intends to invest into with the $600 million that they raised.

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