LTA sells $1.4b bond, its second mega deal in 2019

The Land Transport Authority's latest issue was well received, with broad-based participation and a growing number of investors, said Mr Clifford Lee, head of fixed income at DBS Bank
The Land Transport Authority's latest issue was well received, with broad-based participation and a growing number of investors, said Mr Clifford Lee, head of fixed income at DBS BankPHOTO: DBS BANK

The Land Transport Authority (LTA) has sold a $1.4 billion 35-year bond, its second major deal this year. The latest issue carries a 3.3 per cent coupon.

It has now raised $2.9 billion this year following the move in January when it issued a $1.5 billion 40-year bond at 3.38 per cent.

Last year the LTA issued four deals worth a total of $4 billion with tenures ranging from 10 to 40 years.

Its latest issue was well received, with broad-based participation and a growing number of investors, said Mr Clifford Lee, head of fixed income at DBS Bank, one of the bookrunners. The others were HSBC, OCBC Bank and United Overseas Bank.

DBS is the only bank that has been involved in all six LTA transactions, added Mr Lee yesterday.

"It has been exciting for us because the LTA is very progressive in approaching both book-building and distribution," he noted.

Mr Lee said the LTA is a "highly-sought-after issuer and much is bought by long-term hold investors".

Typical investors of long-term bonds include insurers and various types of asset or fund managers.

Geographically, Singapore-based investors have dominated the deals, he said.

"We priced the $1.4 billion reluctantly," said Mr Lee, meaning the demand was for a much bigger deal to fulfil investors' requests.

In the past, government-linked entities focused on the price so the deals would be done on a bidding basis with the bonds ending up in the hands of just a handful of banks.

"But LTA is more progressive; it wants to broaden the investor base, attract new investors and deepen the Singapore dollar market further so that it can accommodate longer-term financing for infrastructure investments," said Mr Lee.

"This bodes well for Singapore's ambition to become an infrastructure financing hub."

The Singapore dollar bond market is zipping along. Volume has hit $11.38 billion from 45 deals so far this year - well up on the 41 deals worth $7.66 billion recorded in the same period last year.

Market volatility has meant that investors are turning back to bonds as a defensive strategy, said Mr Lee.

A version of this article appeared in the print edition of The Straits Times on May 23, 2019, with the headline 'LTA sells $1.4b bond, its second mega deal in 2019'. Print Edition | Subscribe