The first Significant Infrastructure Government Loan Act (SINGA) bond will be issued soon. The sizing announcement is scheduled for 21 September, followed by an auction on 28 September, and an issuance on 1 October. The bond will be a long-dated one with a 30-year tenor, and backed by the Singapore government. Singapore Government Securities (SGS) bond yields of 1.89% for 30-year tenor ranks one of the highest in the world for AAA-rated economies, therefore we expect decent demand for the new SINGA bond.
Key points about SINGA bonds:
- Proceeds will be used for a hump in Singapore’s development expenditure spending to spread liabilities over a few decades. Safeguards have been put in place to ensure that Singapore’s AAA-rating does not get threatened.
- With regards to yields and pricing, there should be no difference between the SINGA infrastructure bonds and SGS bonds. Both have the same credit regulatory, underwriting, market support and tax treatments.
- They come with longer tenors, possibly up to 40 and 50-years.
- Issuances will likely be in SGD, but can also be issued in foreign currencies.
- There is a cap of S$90 billion on SINGA bonds, and issuances are likely to be spread out, not frontloaded.
- SINGA bonds should be included in bond indices, with issuance sizes at S$1.5 billion or more.