Domestic Bond: The Government of Singapore’s S$2.4bn 50-year green bond

IFR Asia Awards 2022
3 min read
Morgan Davis

In full bloom

The Singaporean government burst onto the ESG scene in 2022 with its debut green bond, netting S$2.4bn (US$1.8bn) and becoming the first sovereign worldwide to print such an issue at a 50-year tenor.

Singapore has been pushing further into the sustainability space, making a name for itself with sustainable finance initiatives run through the city-state’s monetary authority, and committing to net zero emissions by 2050. It established its green bond framework in June, before bringing the issue in August.

Singapore spent some time monitoring the market for an appropriate window for its debut trade, since successive 75bp rate hikes by the US Federal Reserve in June and July had caused extreme market volatility. It also used this time to meet with investors, who were keen to take exposure to a Aaa/AAA/AAA rated borrower but wanted to understand its green message.

This was the first time the sovereign had sold bonds through a syndicated trade, and also its longest issue to date.

The tenor was noteworthy, as it was the world’s first 50-year green bond sold by a sovereign. In a year when many skirted long tenors, Singapore managed to push to new lengths, going beyond the 30-year benchmark that other sovereigns had set in the green market. Prior to the Singapore sale, the UK’s July 2053 Gilt was the longest-dated green bond.

The 3% 2072 bonds were priced at 98.976 to yield 3.04%, inside initial price guidance of 3.15% area. The order book for the institutional tranche hit S$5.1bn, including S$425m from the leads, at reoffer. A large chunk of the deal was picked up by insurance accounts.

A S$50m tranche of the notes was offered to retail investors, and closed oversubscribed despite the long tenor.

The transaction was the first of what should be many such issuances from Singapore, as the government and its statutory boards plan to issue up to S$35bn in sovereign and public sector green bonds by 2030.

The proceeds from the trade will be used to fund long-term infrastructure projects related to the expansion of the electric rail network. Singapore plans to reduce private transport in the city, reaching a 75% mass public transport modal share by 2030.

The deal was issued under the Significant Infrastructure Government Loan Act 2021 (SINGA), which will include S$90bn of green and non-green infrastructure bonds over 15 years. Projects eligible under SINGA must be strategically important to Singapore’s development.

DBS Bank, Deutsche Bank, HSBC, OCBC Bank and Standard Chartered were joint lead bookrunners for the deal. DBS was also sole green structuring adviser and Sustainalytics provided a second-party opinion.

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