The Land Transport Authority (LTA) of Singapore has increased the size of its offering of dual-tranche Singapore dollar bonds to $1.2 billion, making it the largest issuance year to date in Singapore.

The sizes of the tranches of seven and 12 years were raised from an original $500 million to $600 million each, reflecting healthy demand, although no distribution statistics were released. The books on both tranches went subject within a few hours of launch.

Bankers had said on Thursday that interest was keen among insurance companies, fund managers and financial institutions.

LTA bonds are used as proxy for the government of Singapore, but provide a bit of pick-up over the Singapore government securities (SGS). The seven-year paper was priced on Thursday at a premium of around 20 basis points over the seven-year SGS yield which was 2.35 per cent. The paper will be issued off a $5 billion multicurrency medium-term note programme on Aug 31.

The offering's positive result was a surprise as markets have been weak, dragging stocks and bonds lower lately.

The seven-year piece yields were a very fine spread of five basis points over Singapore dollar SOR (Swap Offer Rate), something that has not been seen for a Singapore borrower since the Housing Board commanded single-digit spreads back in 2012. The spread on the 12-year tranche was a more typical 20 basis points.

Rival bankers said the pricing was very tight on both tranches, but that the deal would attract demand from fund managers and insurance companies keen to buy the paper for their minimum liquid assets portfolio.

DBS was sole lead manager and bookrunner.

REUTERS