SINGAPORE - Retail investors have made a rush for Temasek Holdings' first public retail bond offer that closed on Tuesday (Oct 23).
The $200 million tranche garnered valid applications of around $1.68 billion, making the offer more than eight times subscribed.
Here's what you need to know about the T2023-S$ bond:
1. This is a five-year bond paying a fixed interest of 2.7 per cent a year. Interest is paid every six months with the principal amount repaid in 2023. Temasek is guaranteeing all interest payments and the full repayment of the principal.
2. Retail investors had to apply for the bonds with a minimum investment of $1,000 and in multiples of $1,000.
3. Before applying, they had to ensure their Central Depository (CDP) accounts were ready and linked to the relevant bank account. After the Temasek bonds start trading on the Singapore Exchange on Friday (Oct 26), they can be bought and sold just like any listed stock. Besides cash, buyers can use their Supplementary Retirement Scheme savings. The bonds will also be included under the Central Provident Fund Investment Scheme.
4. There are risks involved in bond investments. They include default, interest rate changes and other risks. For instance, an issuer may fail to pay the interest or even fail to repay the principal amount when its bonds are due.
In addition, interest rates in the market may rise and this may cause the bond price to fall. If you need to sell your bonds in such situations, you may suffer a loss.
5. Temasek has been issuing bonds since 2005 as public markers of its credit quality. Bond prices may rise or fall in the market. If the price falls more than other bonds, it may be a public signal that investors have concerns about the credit quality of its issuer.