SMRT Capital’s debut $150m note issue well received

Orderbook closed within half hour of launch with 2 times oversubscription

The debut $150 million note issue of SMRT Corp’s wholly owned subsidiary, SMRT Capital, has attracted strong demand.

‘Strong interest from bond investors resulted in the orderbook being more than two times oversubscribed and closed within half an hour of the launch of the notes,’ SMRT said yesterday.

The five-year 2.42 per cent fixed rate notes are issued under SMRT Cap’s $1 billion multi-currency guaranteed medium term note programme and are expected to be issued on Oct 7 and mature in 2014. SMRT guarantees the servicing of the notes. Hongkong and Shanghai Banking Corporation acted as sole lead manager and bookrunner of the notes and sole arranger of the programme.

The programme has been rated AAA by Standard & Poor’s.

The net proceeds arising from the issue of the notes will be used to finance the general corporate funding requirements of SMRT and its subsidiaries.

The issue of the notes represents SMRT Cap’s debut visit to the bond markets and is the first bond issue from the SMRT group since December 2006.

The deal was priced on Wednesday at about 10 basis points above the five-year Singapore-dollar Swap Offer Rate, the tightest five-year pricing for a Singapore domiciled corporate since January 2007.

Executive vice-president and chief financial officer for SMRT Corp Lim Cheng Cheng said: ‘We are very pleased with the keen investor response to our issue. This issue helps us re-establish SMRT’s presence in the Singapore-dollar bond markets in a very positive manner.’

Amit Gupta, managing director and head of global markets for HSBC in Singapore, said: ‘We are privileged and honoured to have brought a premium institution like SMRT to the Singapore-dollar bond market. By leveraging on HSBC’s strong capital markets platform and local knowledge, we were able to execute a broadly distributed transaction for SMRT Capital at the tightest five-year pricing level achieved in the Singapore-dollar bond market since January 2007.’

Temasek-linked companies (TLCs) have been on a fund-raising spree over the past few months as they take advantage of a recovering economic outlook to tap the financial markets to build up war chests ahead of potential future deals. For some, such a move will also improve their debt positions.

Six TLCs have raised a massive $10.5 billion from rights issues since December.

In July, SMRT said it is acquiring a 49 per cent stake in Shenzhen transport company Shenzhen Zona Transportation Group for 320 million yuan (S$68 million). SMRT said its first investment in a Chinese company is a beachhead for its expansion into China. SMRT said at its Q1FY10 results briefing that it sees a tough year ahead with continued volatility in diesel prices, the effects of the fare reduction package and the ramp-up costs for the opening of the remaining Circle Line stations.

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