Singapore prices 50-year sovereign green bonds at 3.04%

SINGAPORE - Singapore’s second offer of its sovereign green bonds was well received by investors, once again surpassing pricing indications.

The 50-year bonds, officially called Green Singapore Government Securities (Infrastructure), were priced to yield 3.04 per cent on Thursday. This is about 11 basis points lower than the initial price guidance of 3.15 per cent.

The final offer amount is not determined yet, though the book building process indicates that the order book is oversubscribed.

The tighter final pricing is a reflection of the Singapore Government’s credibility among investors, said Mr Jerome Tay, fixed income analyst at Abrdn.

The final yield and spread are the same as the bonds’ inaugural issuance of $2.4 billion in August 2022.

The Government had planned to raise between $2.3 billion and $2.8 billion through these 50-year sovereign green bonds, said the Monetary Authority of Singapore (MAS) in a notice on Thursday. The offer amount includes $50 million of bonds that will be set aside for retail investors, who can begin to apply for them between 9am on Friday and noon next Tuesday.

This is an upsize from a minimum issuance size of $1.8 billion MAS had initially indicated on Monday, when it first announced that it was going to reopen its offer of green bonds some time this week.

The bonds were priced through a syndicated book building process, with Citibank, DBS Bank, OCBC Bank, Standard Chartered Bank and UOB acting as its book runners. This is in contrast to the conventional method where Singapore government bonds were priced via auctions that followed a strict calendar.

Since this offer is a reopening of the first sovereign green bonds, it has the same maturity date of Aug 1, 2072, and a coupon rate of 3 per cent.

The bonds are expected to be issued on Sept 4, with coupon payments disbursed on the first day of February and August every year until maturity or when they are redeemed.

This offering is the second in a series of sovereign green bonds to be issued under the Singapore Green Bond framework. The Government has indicated that a pipeline of up to $35 billion of sovereign and public sector green bonds will be issued by 2030.

A key aspect of the green label for the bonds is that proceeds will be used to finance expenditures in support of the Singapore Green Plan 2030, including two new MRT lines – the Jurong Region Line and the Cross Island Line.

THE BUSINESS TIMES