First USD Issue Guaranteed By Singapore Govt : Clifford Capital USD 5Y


Issuer:  Clifford Capital Private Limited
Guarantor: The Government of Singapore
Guarantor Ratings: Aaa / AAA / AAA (Moody’s / S&P / Fitch)
Expected Issue Rating: AAA (S&P)
Description of Guarantee:     Unconditionally and irrevocably guaranteed by the Guarantor (subject to certain limits as described in the Programme Offering Circular)
Status:  Senior Unsecured
Format: Reg S Registered, off US$1bn EMTN Programme
Tenor:  5 years
Issue Size:  US$ 300 million
Price Guidance:  T5 + 57-60 BPS
Details: US$200k x US$1k denoms, SGX Listing
Governing Law:  Notes are governed by English law, Guarantee governed by Singapore law

Works out to be about 1.85-1.88%. Our SGD govt 5Y bond (Arp 2018) is going at 0.684% which is about USD 0.93% when swapped.

Worthy of mention because this will be the first bond guaranteed by the Singapore government that is not issued by the government.

Even Temasek and HDB are not guaranteed explicitly by the government which makes Clifford special and considered a better credit than the rest, including its own parent, Temasek.

So why Clifford ? An entity set up in Nov 2012 backed by a strong consortium of shareholders including Temasek, DBS, Standard Chartered, Sumitomo Mitsui Banking Corp, Manulife and Prudential.

Few of my fund manager friends know. Then a good friend, The Big Kahuna, hit on potentially it.

It is just like Freight Links !! borrowing 4 year money at 4.6% and lending to City Harvest >10%.

Read this.

So Clifford goes to Turkey and buys USD 79.5 million unsecured in the Mersin Port 7Y bond in August this year. Yield 5.875%.

They borrow USD at 1.85-1.88% for 5 years. And they are deep in the money for the Mersin bond which is going at 103.50/104 now.

Nice going and mighty decent and generous of the Singapore government here to support the other shareholders of Clifford. Who says there is no free lunch ?

Temasek cannot guarantee the bonds because it is not a full subsidiary and it would be pointless because Temasek can invest directly themselves.

Verdict : Value for money in its pick up over SGD government bond equivalent.