SGD New Issue Review : SMU 10Y SGD, finally


Issuer:  Singapore Management University
Status:  Senior, Unsecured, Fixed Rate
Expected Issue Rating: Aaa (Moody’s)
Format: Reg S, S274 & 275 of Singapore SFA, issued off the S$800m Multicurrency MTN Programme
Tenor: 10 years
Issue Size: TBD
Initial Price Guidance:   10year SOR + 50bps area
Payment: Semi-annual, actual/365 (fixed)
Expected Settlement Date: T+7
Issue Date: [ ] March 2014
Maturity Date:  [ ] March 2024
Details: SGD250k denoms / Singapore Law / CDP / Not listed

The Singapore Management University is a fully incorporated company limited by guarantee from its board of trustees, much like NTU and NUS, although they receive but a fraction of the grants the other two get and thus, their negative cashflows which include the few million it took to move a heritage protected tree from their old campus.

There is little to talk about for this long awaited bond which has been in the back burner of the local bond market for the past 6-8 years but we are finally seeing SMU at last.

I am hearing that the issue size will be limited to SGD 100 mio which is enough to create a market frenzy on scarcity so retail folks should not be able to get even a whiff of this.

On the price. Coupon of 3.23% compared to 10Y SGS (maturing 2013) at 2.55% and SGS maturing in 09/2024 is at 2.71%, makes it a steal. I would not attempt to compare this Aaa issue with HDB 06/2024 which valued at 3.6-3.7% or the HDB 02/2023 at 3.4-3.5%.

The new Capital Mall Trust 3.08% 7 year paper is currently trading at 3%, or thereabouts, for its A2 rating which makes SMU look good.