Martin Lee @ Sg
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Temasek to Raise More Money From Bond Offering

Temasek Holdings has sold another US$1 billion in bonds, its fifth offering in as many months. Since October last year, Temasek has raised more than $4 billion through bond sales, including yesterday’s issue.

temasek bondsThe latest 10-year offering will have a coupon rate of 3.265 per cent, which is lower than the roughly 4.3% yield in a similar offering last October. The bond is denominated in size of US$250,000.

Temasek has also doubled its global medium-term note programme so it now has the scope to issue US$10 billion (S$14.2 billion) in bonds, up from the previous limit of US$5 billion.

The reason given for the bond offering is to fund the ‘ordinary course of business’ of Temasek and its investment holding companies.

My wishlist: Temasek to issue S$ bonds to CPF board (instead of private investors) with the higher yield passing through to CPF members.

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14 comments
hongjun says 8 years ago

I would rather buy equities.

Reply
Intheknow says 9 years ago

For those interested…

Singtel (we all know who is the parent) has issued 10 year SGD denominated bonds paying 3.4875% coupons.

My opinion is that this is a much better deal considering it is in SGD, high coupons, and the credit risk is about the same from layman’s perspective.

disclaimer: although temasek notes are rated AAA and Singtel notes are rated AA, we know their relationship.

Cheers,
Intheknow

Reply
Jasmin says 9 years ago

Or, if anything happens, at least the locals are not affected since they have not invested?
Does it benefit the country if it launches, say min $10k SGD bond to the locals?

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    lioninvestor says 9 years ago

    Hi Jasmin,

    At the end of the day, it doesn’t really make a difference to Temasek whether it raised 1 bil from issuing bonds to 1000 investors or to 100000 investors.

    But a 10k bond would allow the man in the street to take part in the offering. Whether that is a good or bad thing depends on each and every individual.

    Reply
Daniel P says 9 years ago

I dont think Temasek wants the average Singaporean involved, if the govt wanted us involved, they would have sold us discounted shares like Singtel.

Reply
    lioninvestor says 9 years ago

    Hi Daniel,

    Agreed with you. Helping us directly is not really its core business.

    Reply
      VSL says 9 years ago

      Sometime last yr Temasek went on a publicity spree telling us about their new strategy about being more transparent, getting citizens involved in their biz etc. Was it just paying lip service? Or was it a smoke screen to cover up the true reasons regarding the fallout between Temasek and Charles Chip Goodyear (the BHP Billiton guy)?

      Reply
        lioninvestor says 9 years ago

        Hi VSL,

        I suppose you got your question partially answered today.

        Reply
VSL says 9 years ago

If Temasek is seriously interested in getting every Singaporean to be involved in its endeavours, then it sholud offer SGD bonds in smaller denominations (eg in lots of SGD10 k) direct to the local public.

It is pointless to us ordinary folks if such bonds are bought by institutional buyers, many of whom would be foreigners. Sure, we can buy in the secondary market, but then the coupon rate will be lower.

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    lioninvestor says 9 years ago

    Hi VSL,

    I don’t think Temasek is interested in getting Singaporeans involved. These decisions are purely commercial.

    Reply
Norman Tsai says 9 years ago

I find this whole Bond issuing operation by Temasek rather alarming, especially the magnitude and frequency of the operation.

My opinion is that Temasek (or our nation Singapore as a whole) may be in trouble.

Why the need to borrow at such a scale & frequency just to fund the ‘ordinary course of business’ of Temasek and its investment holding companies?

Be prepared.

Reply
    lioninvestor says 9 years ago

    Hi Norman,

    One area where Temasek had spent a sum of money over the past one year plus is in subscribing to all the rights issue of its holdings.

    But I didn’t really track the amount closely so I don’t know what is the total.

    If Temasek had to issue a few billion worth of debt just to fund it’s ordinary course of business, then I would find it a bit ridiculous.

    Should an entity tasked with growing our reserves take on debt (and leverage) in order to get a higher return? It doesn’t have to and I think it shouldn’t do it excessively.

    Reply
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