MAS launches $2.4b inaugural sovereign green bond, 50-year debt priced at 3.04%

Green SGS (Infra), has a tenor of 50 years - the first time the Singapore Government is issuing a 50-year tenor debt. ST PHOTO: DESMOND WEE

SINGAPORE - Singapore’s central bank looks to raise $2.4 billion with its first sovereign green bond issuance, according to a notice issued on its website on Thursday (Aug 4).

The Green Singapore Government Securities (Infrastructure), or Green SGS (Infra), has a tenor of 50 years - the first time the Singapore Government is issuing bonds with such a long maturity period. 

The bond was priced at 3.04 per cent, the Monetary Authority of Singapore (MAS) said on Thursday evening. 

The effective yield of 3.04 per cent entails a coupon rate, or interest payment, of 3 per cent a year, and a price of $98.976 per $100 in principal value. 

A total of $2.35 billion of the 50-year bond was placed with institutional and accredited investors. 

Strong investor demand was shown for Singapore’s inaugural sovereign green bond, with a combined placement order book of more than $5.3 billion, or 2.26 times the size of the amount offered. 

The remaining $50 million of the bond will be offered to individual investors in Singapore who may submit their applications from 9am on Friday to noon on Aug 10.

MAS may, at its discretion, reallocate the aggregate principal amount of bonds offered between the placement and public offer.

Retail investors must apply for a minimum of 10 application units under the public offer. Each application unit represents $100 in principal amount of the bonds, with a settlement price of $98.976. This means the minimum application amount is $989.76.

Only cash applications are accepted. Central Provident Fund and Supplementary Retirement Scheme monies cannot be used.

The allocation outcome for the placement and public offer will be announced on or around Aug 11, and the bonds will be issued on Aug 15. 

The coupon payment dates will be on Feb 1 and Aug 1 of each year up to and including the maturity date, with the first coupon to be paid on Feb 1, 2023.

Green SGS (Infra) is governed by the Singapore Green Bond Framework and issued under the Significant Infrastructure Government Loan Act, which was passed in Parliament last year.

This inaugural sovereign green bond is part of a pipeline of up to $35 billion of sovereign and public-sector green bonds that the Singapore Government and its statutory boards will issue by 2030.

Proceeds from the sale of the green bond will finance projects with environmental benefits, including the Jurong Region MRT Line and Cross Island MRT Line.

This is the first time MAS is issuing a bond via the syndication process, which involves the appointment of a group of banks, or book runners, to jointly market and distribute a bond.

The book runners for this issuance are DBS Bank, Deutsche Bank, HSBC, OCBC Bank and Standard Chartered Bank.

The syndication method is intended to complement the Singapore Government’s regular schedule of SGS auctions where buyers submit bids for government bonds.

Singapore joins other Asian economies such as Hong Kong and South Korea in issuing green debt.

The Government’s issuance of green bonds is intended to support the country’s decarbonisation efforts and deepen its green finance market.

These public-sector green bond issuances will serve as reference for the corporate green bond market, deepen market liquidity for green bonds, and attract green issuers, capital and investors, paving the way for greater private-sector green finance activity, as detailed on the Finance Ministry's website.

Mr Leong Sing Chiong, deputy managing director for markets and development at MAS, said: “The successful launch of Singapore’s inaugural sovereign green bond marks an important milestone in our sustainability journey. 

“The strong order book affirms investors’ confidence in the Government’s plans to build green infrastructure for a financially and environmentally sustainable future.”

DBS global head of fixed income Clifford Lee pointed out that while other jurisdictions have issued green bonds, Green SGS (Infra) is the first 50-year sovereign green bond as well as the longest-dated green bond ever issued by any sovereign entity globally. 

“It will test the depth of the investor base for such long-dated Singdollar (SGD) bonds and open up the market for further deepening of the SGD market to stretch the tenors and extend the SGD yield curve,” he added. 

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