Singapore government investment fund Temasek Holdings completed its long-trailed debut bond in September, raising $1.75 billion in 10-year money. The deal was increased from an original $1 billion amid strong demand for paper that was AAA-rated by Moody's and Standard & Poor's.
With a rating like that, it is no surprise that Temasek secured pricing at just 44 basis points over US treasuries, with the bond yielding 4.5%. Singapore enjoys a AAA sovereign rating and investors clearly see an implicit guarantee behind the firm, which is, after all, 100% owned by the government. Such ratings are extremely rare in Asia and this scarcity value assisted managers Deutsche Bank, Goldman Sachs and Morgan Stanley in marketing the deal.
Temasek has been on something of an extended spending spree since new managing director Ho Ching took office in 2002, with significant investments in China, India, Indonesia and Korea, including more than $6 billion of commitments to China's banking sector alone. It's no surprise then that the investment firm decided to raise fresh capital. At rates as fine as those secured by its debut bond and with a less certain interest rate outlook, it might not be so long before Temasek taps the debt markets again.