UPDATE: Temasek Sterling Bond 3 Times Subscribed; UK Demand

20th Jul 2010 07:31

(Combines previous stories, adds detail, recasts.) By P.R. Venkat and Sam Holmes Of DOW JONES NEWSWIRES SINGAPORE (Dow Jones)--Singapore state investment company Temasek Holdings Pte. Ltd.'s first pound-denominated bonds were snapped up by U.K. and other European investors eager to get their hands on a rare sterling issue from a top-rated name. Temasek sold the GBP700 million two-tranche bond "in response to enquiries from U.K.-based institutional investors about long-dated, high-grade sterling bonds," Temasek's head of treasury, Alyssa Ong, said in a statement Tuesday. The deal was well over three times subscribed, with bids totaling some GBP2.35 billion, said a banker involved in the deal. The GBP500 million 30-year tranche was three times subscribed, while the GBP200 million 12-year chunk was 3.5 times subscribed, the banker said. The bonds "add new stakeholders for Temasek, enhance our capital efficiency and increase our funding flexibility," Ong said. Reflecting the strong demand, Temasek priced the 30-year tranche to yield 90 basis points over comparable U.K. government bonds, tighter than the 92-95 basis-point guidance it earlier indicated. The 12-year tranche priced at 95 basis points over gilts, in from guidance of 97-100 basis points. Another indicator of demand for the bonds will come when they begin trading in the secondary market at 0700 GMT. The move into pounds is part of a US$10 billion medium-term note program by Temasek, which is rated AAA by Standard & Poor's Corp. and Aaa by Moody's Investors Service Inc. It previously sold about US$6 billion worth of bonds denominated in U.S. and Singapore dollars. "The proposed issuance will further strengthen Temasek's liquidity and help maintain a staggered debt-maturity profile," Moody's senior credit officer Elizabeth Allen said in a statement. The sterling "issuance will match its underlying asset profile." The idea to issue in pounds came up in a global series of investor meetings last week on Temasek's recent fiscal-year performance, said bankers familiar with Temasek deals. Temasek said the parent company and its affiliates would use the proceeds "to fund their ordinary course of business." A person familiar with the matter said the firm doesn't plan to swap the money back into Singapore dollars but wouldn't comment on whether Temasek was planning to use the cash for U.K. acquisitions. The fund's biggest U.K. holding is an 18% stake in Standard Chartered PLC. Investors for the bonds were predominantly from the U.K., with some from Germany, Singapore and elsewhere in Asia, said a banker involved in the deal. Most of the European investors are fund managers, pension funds and insurance companies, the banker said. -By P.R. Venkat and Sam Holmes, Dow Jones Newswires; +65 64154 152; [email protected] (END) Dow Jones Newswires July 20, 2010 02:31 ET (06:31 GMT)