Singapore’s inaugural sovereign green bond, the Green Singapore Government Securities (Infrastructure) – Green SGS (Infra) was launched on 4 August 2022. This bond (Aug-72 bond) was priced at 3.04% for a tenor of 50 years.
For Singapore investors keen to invest in this new green sovereign bond, here are the key things to note about Green SGS (Infra).
Read Also: Complete Guide To Buying Singapore Savings Bonds (SSB)
What Is The Green Singapore Government Securities (Infrastructure) – Green SGS (Infra)?
The Green Singapore Government Securities (Infrastructure) – Green SGS (Infra) is issued under the Singapore Green Bond Framework to finance major, long-term green infrastructure projects. Its issuances fall under the sovereign bonds issuances as allowed under SINGA.
As a recap, Significant Infrastructure Government Loan Act (SINGA) was first announced during Singapore Budget 2021 to allow the Singapore government to issue bonds to finance long-term infrastructure projects. The Act was then tabled in Parliament and passed on 10 May 2021, authorising the Government to borrow up to S$90 billion over the next 15 years to finance major, long-term infrastructure, such as new rail lines and coastal protection infrastructure to protect Singapore against rising sea levels.
To guide the government’s commitment to Singapore’s transition to a low-carbon economy and spur Singapore’s development as a green finance hub, the Singapore Green Bond Framework was established on 9 June 2022. The principles of the Framework will govern the issuance of up to S$35 billion of green bonds that will be issued by the public sector by 2030.
The inaugural Green SGS (Infra) is the first issuance under the Singapore Green Bond Framework and its proceeds will be used to finance expenditures in support of the Singapore Green Plan 2030, including the Jurong Region Line and the Cross Island Line.
What Is The Difference Between Green SGS (Infra), SINGA Bonds And SGS (Singapore Government Securities)?
Bond investors may be already familiar with SGS (Singapore Government Securities) which have been offered by the Government to retail investors for many years. With the introduction of SINGA, the government had launched new bonds under SINGA, which are named SGS (Infrastructure). The existing SGS were then renamed as SGS (Market Development).
Similar to SGS (Infrastructure), Green SGS (Infra) is issued under SINGA. However, they differ in their method of sale. SGS (Infrastructure) is issued via auction, similar to the existing SGS (Market Development). Green SGS (Infra) is issued via Syndication.
As they are all issued by the Singapore Government, they have the same sovereign credit rating of AAA.
| SGS (Market Development) | SGS (Infrastructure) | Green SGS (Infrastructure) | |
| Legislation | Government Securities Act | Significant Infrastructure Government Loan Act (SINGA) | Significant Infrastructure Government Loan Act (SINGA) |
| Objective | To develop the domestic debt market | To finance major, long-term infrastructure | To finance major, long-term green infrastructure projects |
| Method of Sale | Auction: Uniform price auction – competitive or non-competitive bids | Auction: Uniform price auction – competitive or non-competitive bids | Syndication: Public Offer – fixed price and yield as determined in the Placement Tranche. MAS will seek to allocate the bonds in the Public Offer to as many individuals as possible, taking into account the distribution of applications. |
Read Also: 4 Things To Know About The New SINGA Bonds Issued By MAS
Green SGS (Infra) Will Be Issued Via Syndication
The Green SGS (Infra) is issued via syndication which complements the existing regular schedule of SGS auctions. The syndication of SGS (Infrastructure) is governed by MAS’ newly established Medium Term Note programme. This method of sale allows the Government more flexibility over the timing and size of the issuance, and provides retail investors certainty over the yield, price, and coupon of the bond before they decide whether to apply.
Under syndication, a group of banks, known as bookrunners, would jointly market and distribute the bond. During the Opening of Placement Tranche/ Pricing Day, MAS will issue a Public Notice and the bond will be offered to institutional and other investors by the bookrunners. The price and yield of the bond will be determined though an intra-day book-building process and will be announced by MAS in a Pricing Notice by the evening of pricing day.
The Public Offer will start one business day after pricing day. During this time, the bond will be offered to the public at the price and yield determined in the Placement Tranche (and published in the Pricing Notice). This will be open for about 3 to 5 calendar days. After the Public Offer closes, the bonds will be allocated on the following day and the bonds issued and credited to CDP accounts about 2 business days after the allotment.
Placement of 50-year SGS (Aug-72 bond)
For the inaugural Green SGS (Infra), S$2.35 billion of the 50-year bond (Aug-72 bond) was placed with institutional and accredited investors at the price of $3.04%. The remaining S$50 million of the bond is now available on Public Offer to individual retail investors.
The Public Offer is open from 9:00am on 5 August to 12:00 noon on 10 August 2022.
The new Aug-72 bond is the first 50-year bond issued by the Singapore Government and is also the longest-tenor green bond issued by a sovereign to date. There was strong investor demand as the bond was 2.26 times oversubscribed by institutional and accredited investors during the placement tranche.
Under the Public Offer, individual investors can subscribe to the bond. The effective yield is 3.04% with a coupon rate of 3.00% p.a. and a price of $98.976 per $100 in principal value. The maturity date would be 1 August 2072.
| Bond | Aug-72 |
| Tenor | 50 Years |
| Coupon | Fixed coupon of 3.00% per year, payable
semi-annually until maturity, with the first coupon paid on 1 Feb 2023 |
| Price | S$98.976 per $100 in principal amount of the Bonds |
| Issue Date | 15 August 2022. Bonds will be credited to the CDP accounts of successful applicants on this date. |
| Maturity Date | 1 August 2072. You will receive your final coupon payment and principal amount on this date. |
Individual Retail Investors Can Apply Via ESA/ IPO Application
To apply for the Green SGS (Infra), investors can apply via the Electronic Securities Application (ESA) or the IPO application via:
- ATMs: DBS/ POSB, OCBC and UOB
- Internet Banking: DBS/ POSB, OCBC and UOB
- Mobile Banking: DBS and UOB
A non-refundable $2 application fee will be charged. Only one application per individual will be accepted. You can’t make multiple applications through different banks. Only individual CDP accounts are accepted.
Each application unit is S$100 in principal amount of the Bonds and the minimum application size is 10 application units or $1,000. Applications must be in multiples of 10 application units.
Only cash applications are accepted for the public offer. After the bonds are listed on the secondary market, investors may purchase them using CPF or SRS funds.
Read Also: Step-By-Step Guide To Subscribing To An IPO (Through Internet Banking)
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