Singapore issues longest-tenor sovereign green bond

The Monetary Authority of Singapore (MAS) issued a 50-year bond priced at a 3.04% yield, the central bank announced on Thursday (August 4), marking the longest-tenor green bond issued by a sovereign.

The book-building process saw a combined placement order book of over S$5.3 billion, more than double the S$2.35 billion offered, MAS said in a statement.

“The extension of the sovereign yield curve to 50 years will further develop the Singapore Dollar bond market and support longer-tenor corporate issuances,” Leong Sing Chiong, deputy managing director for markets and development at MAS, said.

“MAS will continue to support the pipeline of green sovereign bonds, as well as the broader development of green finance as an enabler of global efforts to mitigate climate change.”

The green bond, Singapore’s first, is part of the pipeline of up to S$35 billion of sovereign and public sector green bonds that the Singapore government had earlier announced it will issue by 2030.

MAS said the bonds were placed with “a diverse mix of high-quality institutions”.

The bookrunners are DBS, Deutsche Bank, HSBC, OCBC and Standard Chartered.

The long tenor of the bond is uncommon, with a majority of GSS (green, social, sustainability) sovereign bonds currently up to seven years, and only four in the 20-year or longer range, Ou Yong Xuan Sheng, green bond and ESG (environmental, social and governance) analyst at BNP Paribas Asset Management said.

“Since sovereign issuances in the GSS format is only a recent phenomenon, this suggests sovereign treasuries are not focusing on the long end at the time of issuance,” he said. He believes the issuances in the long-term will be varied across the curve, with five-year, 10-year and 15-year-tenor green bonds for instance.

The order book reflects “sufficient institutional demand”, he added, as investors have increasingly incorporated sustainability elements in their investments. “For fixed income investors, green (or GSS in general) bonds provide them with a direct way to do so.”

“Of course, investors do not only think: ‘This is a green bond, therefore we must invest in it.’. It is first and foremost a regular bond from a financial fundamentals perspective, and so each investor thinks about how a specific bond’s pricing, liquidity, etc. fit in their own investment framework,” he said.