Singapore joins green finance bonanza with 50-year bond
The city state began marketing its first green bond, choosing a 50-year tenor as it joins countries from South Korea to Egypt looking to fund the battle against climate change.
The debt maturing in 2072 will be available to both institutional and retail investors. Official details on the price and the yield will be published later on Thursday, according to the Monetary Authority of Singapore.
Initial price talks centred on the 3.15% area, according to a person familiar with the matter, who asked not to be identified because they’re not authorised to speak about it. The city state doesn’t have a traditional bond with a 50-year maturity. The yield on its 30-year conventional debt has risen steadily over the past year. It stood at 2.8% on Thursday, Bloomberg data show.
Singapore, which now aims to raise between S$1.9-billion (R31.82-billion) and S$2.4-billion from the debut issue, is a relative latecomer to the booming global market for sustainable debt. Europe is the dominant region for issuance, and fellow Asian financial hub Hong Kong raised HK$20-billion via its first green bond for retail investors earlier this year.
With concern about climate change increasing, the market for environmental, sustainable and governance debt is now worth several trillion dollars. Singapore’s new bond will help establish a curve for local currency green notes.
Keen to position itself as an environmental finance hub, the city state is already encouraging sustainable issuance with a program to fund sustainability certification of companies’ bonds and loans. Still, its local-currency green debt market is smaller than that of fellow Asian financial hub Hong Kong, Bloomberg data show.
Singapore’s issuance will fund the expansion of its electric rail network. It is part of the government’s plan to raise as much as S$35-billion of environment-focused financing by 2030. Officials have already set out standards for sustainable investments, defining what actually qualifies as a green.
They stipulate funds can be used for projects including improving energy efficiency, preventing pollution or natural resource management. Expenditures related to fossil fuels and nuclear energy aren’t permissible.
The bookrunners for the syndication are 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. BM