TEMASEK Holdings has sold US$1.7 billion worth of US dollar bonds in an offering that was heavily oversubscribed, allowing it to raise long-term funds at record-low interest rates.
It received orders totalling US$7.6 billion - some 4.5 times the original size of the offer - from institutional investors worldwide.
The strong demand allowed Temasek to price the bonds - issued in two tranches - at lower yields than originally expected.
It sold US$1.2 billion of 10.5-year bonds maturing in 2023 and US$500 million worth of 30-year bonds maturing in 2042.
Asset managers, insurance firms, pension funds, central banks and hedge funds together bought more than 80 per cent of the bonds, a source told BT.
US investors were the biggest buyers of the bonds; they bought 56 per cent of the 10.5-year tranche and half the 30-year tranche, the source said.
Asian investors bought another 27 per cent of the 10.5-year bonds and 30 per cent of the 30-year bonds, while European investors bought the remaining 17 per cent of the 10.5-year bonds and 20 per cent of the 30-year bonds.
"We are pleased with the strong support from our global investor base," said Benny Koh, Temasek's treasury head.
The 10.5-year bonds, which pay coupons at a rate of 2.375 per cent a year, were sold at 99.163 per cent of their face value to give a yield to maturity of 2.466 per cent a year, or one percentage point above the yield on 10-year US Treasury bonds.
The 30-year bonds paying coupons at a rate of 3.375 per cent a year were priced at 97.653 per cent of their face value, for a yield to maturity of 3.502 per cent a year, or 0.95 percentage point above the yield on 30-year US Treasury bonds.
Temasek had initially planned to price the bonds to yield 1.05 percentage points above the yield on corresponding US Treasury bonds, but the strong demand meant it could reduce the interest it needed to pay to attract investors.
The 3.375 per cent coupon on Temasek's 30-year bond is the lowest ever for a US dollar corporate bond of that maturity, according to Thomson Reuters data.
Citigroup, Deutsche Bank, Goldman Sachs and UBS were the joint lead managers and bookrunners for the bond offer.
"The Temasek dual tranche bond deal attracted an overwhelming response from investors globally," said Keith Magnus, head of UBS investment banking for Singapore and Malaysia.
"Investors attached a high scarcity value to Temasek paper given its triple-A rating, a rarity in the global context.
"The order book swelled on closing to US$7.6 billion, comprising orders from 284 investors including asset managers, pension funds, insurance companies and central banks."
The bonds were the 12th and 13th issues under Temasek's US$10 billion medium-term note programme, through Temasek Financial (I) - a special-purpose vehicle of Temasek that was set up in 2004. Including the latest bond sales, Temasek has raised US$9.7 billion through that bond programme, nearly exhausting its capacity.
Credit-rating agencies Standard & Poor's and Moody's Investors Service both rated the bonds triple-A - the highest grade possible.
"Temasek's liquidity and debt service ability remains very strong and this issue of bonds builds on its presence in the debt capital markets as well as maintaining a well-laddered debt maturity profile," said Alan Greene, a senior credit officer at Moody's.
The money raised from the latest bond sales will be used by Temasek and its investment holding companies to fund their ordinary course of business, Temasek said.