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Inaugural Singapore 50-Year Sovereign Green Bond

Inaugural Singapore 50-Year Sovereign Green Bond

(5 August 2022 – Singapore) Singapore is marketing the issuance of its first ever sovereign green bond, opting for a 50-year tenor.

The city state matches similar moves by countries from South Korea to Egypt seeking to underwrite the climate change funding challenge. In response to bullish demand from institutional investors for Singapore's first sovereign green bonds, retail investors can apply to purchase them from Friday 5 August 2022.

The S$2.4 billion bonds, titled “Green Singapore Government Securities Infrastructure” (Green SGS Infra) are also the first 50-year bonds issued by the Singapore Government. The green bonds are priced at a yield of 3.04 percent, with a coupon rate of three percent pa. The bonds have a maturity date of Aug 1, 2072 and the coupons will be paid semi-annually on Feb 1 and Aug 1 for the life of the bond, commencing 1 February 2023.

The majority of the issuance, up to S$2.35 billion, was placed with institutional and accredited investors. The remaining S$50 million was offered to high net worth individual (HNWI) investors.

The Green SGS (Infra) bonds are part of the pipeline of up to S$35 billion of sovereign and public sector green bonds that the Government and its statutory boards will issue by 2030. As part of the recently published Singapore Green Bond framework, proceeds from green bond issuances must adhere to guidelines and can be used to finance projects with environmental benefits, like the upcoming Jurong Region Line and Cross Island Line of the country's rail network.

“We would like to see proceeds from the bonds go towards green innovation as well. Hopefully, at least in my own wish, I would like to see some of the funds being channelled to more green innovation. We are looking at maybe different kinds of infrastructure models, more digitalisation, perhaps even more shared-service platform models that can be financed by the bond” stated KPMG Singapore Director of Sustainability Services, Cherine Fok.

“In terms of the retail investors, the tenor of the bond has always been one of the key considerations. It has got to be so long primarily because of the nature of the underlying assets being mainly energy and infrastructure assets, or even transport assets. So it will take some time for assets to actually be completed or even operational.

“However, the other challenge with it being a sovereign green bond, or sustainable bond, is the fact that many of the green benefits will take some time to play out, so that itself in terms of non-tangible returns, or non-financial returns, is something that is not easily measurable and therefore, for individual retail investors, they may find that that is a hurdle.”

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