March 20, 2019

SIA taps retail debt market

SIA is in the market with a SGD500 million, five-year fixed-rate bond, the second in nine years to target the retail sector.

SIA, in a regulatory filing on 19 March said that the proposed offer — under the carrier’s SGD2 billion medium-term bond programme — includes a placement to institutional investors and a public offer tranche that will be open to retail investors in Singapore.

If there is an oversubscription, the offer may be upsized to a maximum of SGD750 million.

Oversubscription is likely as the orderbook for the placement tranche alone has closed at SGD1.036 billion.

SIA last issued retail bonds — SGD150 million — in 2010, which matured in 2015.

SIA is tapping the retail bond sector in an effort to diversify funding sources.

Net proceeds from the current offer will be used for aircraft purchases and related payments, as SIA is replacing older aircraft, and growing its fleet, with new technology aircraft.

The coupon rate on the bond is 3.03%, comparable to the yield on SIA’s 3.75% notes due in April 2024, which was around 3.05%, prior to announcement of the new issue.

The last Singapore retail bond issuance was in October 2018, when Temasek Holdings launched 2.7% notes due 2023.