Singtel Group prices US$750 million 10-year notes at 2.375%
Singtel leverages strong credit to price new US dollar bonds amid volatile market, which generated strong demand with an order book amounting to US$2.7 billion
Singapore’s largest integrated communications services provider Singapore Telecommunications (Singtel) demonstrated the strength of its credit when it successfully priced a US$750 million offering against a volatile market backdrop that has forced many issuers and investors to stay on the sidelines.
The 10-year bonds, which pay a coupon of 2.375% per annum, generated strong demand from a wide range of high-quality investors with an order book amounting to US$2.7 billion.
The issuance, announced on August 21, is part of Singtel’s long-term financing strategy and extends the group’s debt maturity profile. The proceeds will be used to fund its ordinary course of business.
Issued through Singtel’s wholly-owned subsidiary Singtel Group Treasury (SGT), the offering was drawn under SGT’s S$10 billion (US$7.20 billion) euro medium-term note programme guaranteed by Singtel.
Singtel group CFO Lim Cheng Cheng attributes the strong demand for the paper to investors’ continued confidence in Singtel’s high credit quality.
Citi, HSBC and Standard Chartered acted as the joint bookrunners and lead managers for the transaction.
Singtel previously accessed the US dollar bond market in August 2018 when it printed a US$500 million deal, paying a coupon of 3.875%. Riding on its rarity value and strong credit story, the 10-year transaction also generated a warm market response as it was 5.7x oversubscribed with an order book of US$2.85 billion.
Moody’s Investors Service, which assigned an A1 rating to the deal, says it expects Singtel to use all of the bond proceeds to refinance maturing debt and as such, the impact on leverage will be neutral. “This bond issue will also help to extend Singtel’s debt maturity profile and further strengthen its liquidity position,” says Moody’s vice-president and senior analyst Nidhi Dhruv.
Singtel has about S$3.1 billion in debt, including lease liabilities, maturing over the next 12 months. However, the refinancing risk is considered to be manageable given the company’s demonstrated strong access to the bank and bond markets.
Moody’s says Singtel could explore alternative funding options – including the sale of non-core assets, listing some of its new businesses and potentially raising fresh equity – to strengthen its capital structure and credit profile. However, the timing and execution of such initiatives are unclear.
Singtel, which is owned 52.5% by Temasek Holdings (Private) Limited, has a regional footprint across 21 countries covering around 700 million mobile subscribers as of June 30.
22 Aug 2019