Insurer NTUC Income on Tuesday night set a new benchmark in the Singapore dollar market when it priced a S$600 million ($480 million) subordinated bond. The deal was a debut bond for NTUC Income, and a rare one out of the insurance sector. As such, it attracted a blowout S$9 billion ($7.2 billion) worth of orders, the biggest book ever for a Singapore dollar bond — comfortably exceeding the S$6 billion of orders for Genting Singapore’s S$1.8 billion perpetual in March.
The leads — DBS, Citi and Standard Chartered — started out with initial price talk of 4% for NTUC Income’s 15-year tier-2 issue, which has a call option at the 10th year. The closest comparable, the outstanding Great Eastern Life tier-2, which matures in 2026, was trading at a yield of 3.9%. This put fair value of a new Great Eastern tier-2 of a similar maturity in the low 4% area and the leads felt that NTUC Income, with its government-linked halo, ought to come tighter. NTUC Income is linked to the Singapore government through the National Trade Union Congress, Singapore’s trade union.
By 2pm on Tuesday, a tremendous amount of orders flooded in, chalking up to $6 billion. This allowed the leads to tighten sharply, with the final guidance coming at 3.65% to 3.75%. The bonds priced at the tight end — at 3.65% — which was equivalent to a spread of 188bp over the 10-year swap offer rate. They found a strong bid in secondary and rose to 101 on Wednesday.
Insurance accounts were allocated 34%, asset managers 28%, private banks 20%, banks 13% and other investors 5%. Singapore investors were allocated 83%, Hong Kong investors 13% and other investors 4%.
