28-04-2025
Singapore prices S$1.8 billion of 30-year green bonds at 2.62%
[SINGAPORE] The second tranche of Singapore's 30-year sovereign green bonds came in with a cut-off yield at 2.62 per cent on Monday (April 26), a drop from the effective yield of 3.3 per cent when it was first issued in May last year via syndication.
This is in line with an overall decline in bond yields across all Singapore Government Securities and Treasury Bills over the last one year, as the United States Federal Reserve cut interest rates.
The reopening of these 30-year green debt, officially known as the Green Singapore Government Securities (Infrastructure), saw S$3.3 billion applications for an allotted amount of S$1.8 billion, bringing the bid-to-cover ratio to 1.84.
All non-competitive applications were allotted, totalling about S$90.7 million, according to auction results posted on the Monetary Authority of Singapore's website on Monday.
The rest were competitive bids, of which about 82 per cent were allotted at the cut-off yield.
Even though there were expectations for Singapore's long-dated bonds to get a boost from the steepest yield curve in three years, Cyrus Ng, senior research analyst at Bondsupermart, pointed out that the initial issuance of these 30-year green bonds had an order book 2.45 times the amount offered to institutional investors, which is higher than the current bid-to-cover ratio of 1.84.
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He added that the reason the yield curve is the steepest in three years is more of a function of it being inverted about a year ago, and that the difference in bond yields between Singapore's short- and long-dated debt currently are not wide enough to significantly boost the demand for long-dated bonds.
'To us, the curve is still quite flat... Right now the pick-up (between short- and long-end bonds) is quite little,' he added.
While the market has priced in about 3 to 4 rate cuts by the US Federal Reserve by the end of the year, Ng said his research team believes that there might be fewer cuts due to uncertainties on inflation and growth rates in the US following President Donald Trump's 'Liberation Day' tariffs.
'We think the Fed will be pressured to keep rates higher for longer,' he added.
Ng added that there is still room for the yields for short-end bonds in Singapore to drop for the rest of 2025, as a result of rate cuts from the US central bank. Long-dated bonds, such as the 30-year green bonds, however, should remain largely unaffected.
This second tranche of 30-year green bonds has a coupon rate of 3.25 per cent and a maturity date of Jun 1, 2054. The bonds are expected to be issued on May 2, with coupon payments disbursed on the first day of June and December every year, until maturity or when they are redeemed.
Its reopening is the fifth in a series of sovereign green bonds that has been issued under the Singapore Green Bond framework.
Besides these 30-year green bonds which were issued in May last year for the first time, there were three offerings of 50-year sovereign green bonds since August 2022.
The Singapore government has indicated that a pipeline of up to S$35 billion of sovereign and public-sector green bonds will be issued by 2030. Thus far, S$11.3 billion has been issued.
A key aspect of the green label for the bonds is that proceeds will be used to finance expenditures in support of the Singapore Green Plan 2030, including two new MRT lines – the Jurong Region Line and the Cross Island Line.
