Feb 09 2010
Temasek to Raise More Money From Bond Offering
Temasek Holdings has sold another US$1 billion in bonds, its fifth offering in as many months. Since October last year, Temasek has raised more than $4 billion through bond sales, including yesterday’s issue.
The latest 10-year offering will have a coupon rate of 3.265 per cent, which is lower than the roughly 4.3% yield in a similar offering last October. The bond is denominated in size of US$250,000.
Temasek has also doubled its global medium-term note programme so it now has the scope to issue US$10 billion (S$14.2 billion) in bonds, up from the previous limit of US$5 billion.
The reason given for the bond offering is to fund the ‘ordinary course of business’ of Temasek and its investment holding companies.
My wishlist: Temasek to issue S$ bonds to CPF board (instead of private investors) with the higher yield passing through to CPF members.
I find this whole Bond issuing operation by Temasek rather alarming, especially the magnitude and frequency of the operation.
My opinion is that Temasek (or our nation Singapore as a whole) may be in trouble.
Why the need to borrow at such a scale & frequency just to fund the ‘ordinary course of business’ of Temasek and its investment holding companies?
Be prepared.
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lioninvestor Reply:
February 9th, 2010 at 11:55 pm
Hi Norman,
One area where Temasek had spent a sum of money over the past one year plus is in subscribing to all the rights issue of its holdings.
But I didn’t really track the amount closely so I don’t know what is the total.
If Temasek had to issue a few billion worth of debt just to fund it’s ordinary course of business, then I would find it a bit ridiculous.
Should an entity tasked with growing our reserves take on debt (and leverage) in order to get a higher return? It doesn’t have to and I think it shouldn’t do it excessively.
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If Temasek is seriously interested in getting every Singaporean to be involved in its endeavours, then it sholud offer SGD bonds in smaller denominations (eg in lots of SGD10 k) direct to the local public.
It is pointless to us ordinary folks if such bonds are bought by institutional buyers, many of whom would be foreigners. Sure, we can buy in the secondary market, but then the coupon rate will be lower.
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lioninvestor Reply:
February 9th, 2010 at 11:52 pm
Hi VSL,
I don’t think Temasek is interested in getting Singaporeans involved. These decisions are purely commercial.
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I dont think Temasek wants the average Singaporean involved, if the govt wanted us involved, they would have sold us discounted shares like Singtel.
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lioninvestor Reply:
February 9th, 2010 at 11:58 pm
Hi Daniel,
Agreed with you. Helping us directly is not really its core business.
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VSL Reply:
February 10th, 2010 at 9:48 am
Sometime last yr Temasek went on a publicity spree telling us about their new strategy about being more transparent, getting citizens involved in their biz etc. Was it just paying lip service? Or was it a smoke screen to cover up the true reasons regarding the fallout between Temasek and Charles Chip Goodyear (the BHP Billiton guy)?
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lioninvestor Reply:
February 11th, 2010 at 10:38 am
Hi VSL,
I suppose you got your question partially answered today.
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Or, if anything happens, at least the locals are not affected since they have not invested?
Does it benefit the country if it launches, say min $10k SGD bond to the locals?
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lioninvestor Reply:
February 11th, 2010 at 10:40 am
Hi Jasmin,
At the end of the day, it doesn’t really make a difference to Temasek whether it raised 1 bil from issuing bonds to 1000 investors or to 100000 investors.
But a 10k bond would allow the man in the street to take part in the offering. Whether that is a good or bad thing depends on each and every individual.
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