Housing and Development Board (HDB) 3.995% 7Yr Senior Bond SGD

Shawn Sng  |   29 Nov 2022  |    129 views

The Housing and Development Board (HDB) has just announced the issuance of its 7-year senior bonds at a final price guidance of 3.995%. The proceeds from this note issuance will be used to finance the development programmes of HDB and its working capital requirements as well as to refinance existing borrowings. These bonds comes with a 7-year tenor which will be maturing on 6th June 2029. The coupon payment for these bonds will be done semi-annually and it is scheduled every 6th June and 6th December, with the first payment commencing on 6th June 2023.

 

The Housing & Development Board (HDB) is a statutory board of the Ministry of National Development (MND), and it was established on 1 February 1960. Its mission is to provide Singaporeans with affordable, quality housing and a great living environment. Some principal activities include: developing public housing and related facilities; allocation of properties and management of public housing and related facilities. HDB currently has a credit rating of AAA from Fitch and the new issuance is also expected to be rated AAA.

 

Financials

In FY2022, HDB net assets increased from $15.36bn in FY2021 to $15.37bn in FY2022. The net deficit stood at $4.34bn up by approximately 87.15% from the previous $2.31bn in FY2021.This is largely due to an increase of home ownership deficit ($3.85bn in FY2022) which has almost doubled from ($1.95bn in FY2021). However, this deficit will be covered by a government grant of $4.4bn that will be provided this year. The Ministry of Finance (MOF) will also act as the lender of last resort to the HDB for its funding requirement as the MOF has funded the HDB’s past deficits. Cash and cash equivalent have increased from $62.8mn in FY2021 to $126.1mn in FY2022.

 

Due to rising interest rates conditions which have pushed bonds rate to go even higher, this new issuance is a step up of approx. 0.56% as compared to a similar bond issuance back in September, in which HDB had issued a 7-year unsecured bond at a final price guidance of 3.437%. Thus for investors who wish to lock in this attractive coupon rate for a duration of 7 years, these bonds would definitely be one to look out for as it is a quasi-government bond that has a low likelihood of defaulting. As the initially offering has closed for subscription, investors who are interested in these notes will have to head onto the bond’s secondary market in our Poems platform to get hold of them from sellers. These notes can be transacted in a minimum lot size of $250K.

 

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