Singapore (CU)_ Singapore started marketing its first green bond to generate up to S$2.4 billion ($1.7 billion) with a 50-year tenor, joining governments from South Korea to Egypt in an effort to finance the fight against climate change. Due to the volatility of the financial markets, the country’s 2072 maturing debt is being sold for the first time through a syndicate. According to a close source familiar with the subject who requested anonymity, initial price discussions were in the 3.15 percent range. According to the data, while Singapore does not have a conventional 50-year bond, the yield on its conventional 30-year paper was 2.8% last week.
According to Winson Phoon, chief of fixed income research at Maybank Securities, “This offers an opportunity to accumulate ultra long duration with some yield pickup over the 30-year, although the 30y/50y spread is not expected to be much”. Despite the fact that long-term bonds have taken a blow this year owing to rising interest rates, the market has been gradually recovering interest in long duration due to fears of a US recession. According to the website of the Monetary Authority of Singapore, official price and yield information would be published later.
The nation entered the global market for sustainable debt rather late. Europe is the dominating market for issuance, and Asian financial hub Hong Kong obtained HK$20 billion ($2.5 billion) from retail investors through its first green bond earlier this year. According to Tamami Ota, head of the sustainable finance research unit at Daiwa Institute of Research Ltd, “Singapore is an international financial center, and just like Hong Kong, Singapore knows that the green element is important”. In an effort to promote itself as an environmental finance hub, the country is already promoting sustainable issuance through a program that finances the sustainability certification of bonds and loans issued by businesses. However, according to statistics, its local currency green debt market is smaller than that of Asian financial hub Hong Kong.
The first green bond issued by Singapore will support the expansion of its electric train network. It comes under the government’s ambition to collect around S$35 billion in finance for environmental initiatives by 2030. Officials have already established rules for sustainable investments, describing what constitutes a green investment. DBS Bank Ltd., Deutsche Bank AG Singapore Branch, The Hongkong and Shanghai Banking Corporation Limited Singapore Branch, Oversea-Chinese Banking Corporation Limited, and Standard Chartered Bank (Singapore) Limited are the bookrunners for the syndication.