Singapore Girl Makes Bond Comeback as City Booms: Asean Credit

Singapore Airlines Ltd. (SIA) sold its

first bond in more than three years as an outperforming economy

drives the city’s busiest debt sales in six quarters.

Southeast Asia’s biggest carrier, whose iconic Singapore

Girl travels the globe inspecting items served to flyers in a

new advertising campaign, raised S$500 million ($396 million)

selling seven- and 10-year notes priced to yield 3.145 percent

and 3.75 percent respectively. Singapore dollar-denominated

offerings rose 24 percent from the final three months of 2013 to

S$6.4 billion. Local-currency note sales in the Asean region

slid 23 percent to $16.1 billion.

A pickup in manufacturing and growth of 3.8 percent this

year, faster than Hong Kong, South Korea and Thailand, is giving

companies the confidence to expand and take on more debt. Las

Vegas Sands Corp. Chairman Sheldon Adelson wants more land for

his casino resort, while Mohamed Mustafa Samsudin Co.,

operator of a 24-hour department store in Singapore’s Little
India, sold a debut note in the island’s currency.

“Optimism in Singapore as a whole is giving borrowers the

confidence to sell bonds,” said Clifford Lee, the Singapore-based head of fixed income at DBS Group Holdings Ltd., the top

arranger of Singapore-dollar notes for the last five years

running. “The country has always had a resilient, open and

stable market but what distracted companies previously was the

attraction of dollar bonds.”

Photographer: Carla Gottgens/Bloomberg

A Singapore Airlines Ltd. flight attendant opens a window shade in the luxury class… Read More

A Singapore Airlines Ltd. flight attendant opens a window shade in the luxury class suite of an Airbus A380 aircraft. Singapore Airlines, founded in 1972, has a route network spanning six continents, according to its website. Close

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Photographer: Carla Gottgens/Bloomberg

A Singapore Airlines Ltd. flight attendant opens a window shade in the luxury class suite of an Airbus A380 aircraft. Singapore Airlines, founded in 1972, has a route network spanning six continents, according to its website.

Borrowing Costs

Offerings in Singapore dollars fell 36 percent to S$19.8

billion last year from 2012 while U.S. dollar issuance in Asia

outside Japan touched a record $126.6 billion. Local-currency

yields in the Lion City average 2.52 percent after spiking to

2.75 percent in September, the highest since November 2008, as

fears Federal Reserve tapering may limit the appeal of regional

Asian economies infected markets.

Notes in the city-state’s currency have returned 1.11

percent this year compared with 1.04 percent for local-currency

bonds in Malaysia, 1.89 percent for baht notes in Thailand and a

loss of 1.03 percent for securities in the Philippines, HSBC

Holdings Plc indexes show. The Singapore dollar has gained 0.13

percent this year, even as the Chinese yuan slumped 2.6 percent.

Singapore Girl

Singapore Airlines, founded in 1972, has a route network

spanning six continents, according to its website. It was the

first airline to offer free headsets and drinks in economy class

in the 1970s and the first to fly an Airbus A380, from Singapore

to Sydney, in October 2007.

Photographer: Munshi Ahmed/Bloomberg

Singapore Airlines, founded in 1972, has a route network spanning six continents,… Read More

Singapore Airlines, founded in 1972, has a route network spanning six continents, according to its website. Close

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Photographer: Munshi Ahmed/Bloomberg

Singapore Airlines, founded in 1972, has a route network spanning six continents, according to its website.

It sold bonds this week “while the interest rate

environment is relatively favorable,” according to spokesman
Nicholas Ionides. “Funds will be used for general corporate and

operational purposes,” he said. “We went with Singapore

dollars given our functional currency is Singapore dollars,

which makes it more cost effective for us to tap that market.”

U.S. dollar borrowing costs for Singaporean companies

average 4.04 percent, down from 4.31 percent at the start of the

quarter, JPMorgan Chase Co. indexes show.

Manufacturing output in Singapore increased 12.8 percent in

February from a year ago, the fastest pace of expansion since

December 2011, Economic Development Board data show. Exports are

expected to rise 1 to 3 percent in 2014, the trade promotion

agency said last month, amid raised projections for global

growth by the International Monetary Fund.

Ringing Tills

Shoppers’ willingness to spend will also increase as price

rises cool, according to Bloomberg Industries analysts. Food

inflation fell to a seven-month low 2.3 percent in February from

3 percent in January. The slowdown, which ended a four-month run

of accelerating price increases, may boost sales of premium-priced branded food and beverages, they said in a March 25 note.

Aspial Corp., which runs a chain of jewelry stores, sold

S$80 million of three-year 4.5 percent notes in January, just

six months after its previous bond transaction. Mohamed Mustafa

Samsudin, which runs the Mustafa store, raised S$75 million

selling similar-maturity notes at 4.75 percent, the first time

its tapped debt capital markets.

Investors in Singapore bought about 90 percent of Singapore

Airlines’ bonds, according to a person familiar with the matter

who asked not to be identified because the details are private.

The carrier plans to start a joint-venture airline with the
Tata Group in the second half of this year to service a surge in

demand for air travel in India, the world’s second-most populous

nation.

Banking Hub

It posted a 65 percent decline in profit to S$50.1 million

for the three months ended Dec. 31 as losses from associated

companies such as budget airline Tiger Airways Holdings Ltd.

crimped earnings. Passenger numbers for the period increased 2.1

percent to 4.78 million and the carrier packed 79.4 percent of

available seats.

As well as establishing itself as a transport hub for

flights to Europe and beyond, Singapore has also become home to

a swathe of private banks and hedge funds. It overtook Japan as

the biggest foreign-exchange center last year and Indonesia’s PT

Bank Mandiri opened its first branch in the city this week.

Expansion of the island’s private banking industry, and the

presence of regional offices of global companies, has drawn more

top talent, with senior executives in Singapore now earning more

than in Hong Kong, human resources consultancy firm Towers

Watson Co. said in a February report.

Foreign Banks

The nation’s bond market is also seeing an increasing

number of foreign banks jostle for arranger roles. Melbourne-based Australia New Zealand Banking Group Ltd. has helped to

arrange 9.8 percent of sales this quarter, ranking no. 3 for the

first time since the final three months of 2011, Bloomberg-compiled data show. London’s Standard Chartered Plc (STAN) ranks

second, helping to arrange 19.3 percent of transactions, behind

DBS at 29.4 percent.

ANZ, Australia’s third-biggest lender, said strong banking

relationships with key Singaporean clients, developed over the

past few years, are “bearing fruit,” according to Vishnu Shahaney, the bank’s Singapore chief executive.

Singapore “is business-friendly and pragmatic in its

approach,” Shahaney said. “It embodies safety and has an

incredible talent pool of finance professionals. Decision makers

are approachable and open, and are able to react to world market

developments very effectively.”

To contact the reporter on this story:

Tanya Angerer in Singapore at

tangerer@bloomberg.net

To contact the editors responsible for this story:

Sandy Hendry at

shendry@bloomberg.net;

Katrina Nicholas at

knicholas2@bloomberg.net

Singapore Girl Makes Bond Comeback as City Booms: Asean Credit