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Categories
| Singapore's Temasek to issue US$5b debt notes. |
| Business & Market 2009 | |||
| Written by The Edge FinancialDaily | |||
| Monday, 19 October 2009 13:44 | |||
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Standard & Poor's Ratings Services had on Monday, Oct 19 assigned its "AAA" rating to the benchmark-size Series 2 senior unsecured notes to be issued by Temasek Financial, which are unconditionally and irrevocably guaranteed by Temasek Holdings (AAA/Stable/--). These notes are the second issuance under Temasek's US$5 billion medium-term note (MTN) program. The ratings on that program and the US$1.75 billion Series 1 guaranteed unsecured notes due 2015 by Temasek Financial are also "AAA". S&P said the corporate credit rating on Temasek reflects its very strong liquidity position, highly diversified and liquid investments, and Standard & Poor's view on the likelihood of extraordinary support from the Singapore government (AAA/Stable/A-1+), if needed. Also most of its major investments have strong business risk profiles, with steady and sustainable cash flows. The international ratings agency said Temasek's investment portfolio was highly diversified with no single investment accounting for more than 17% of the portfolio value. Temasek has adopted a more cautious stance given the economic conditions prevailing with its divestments exceeding its investments and recapitalizations during the year. The rating factors in the strength of its sole shareholder, the Singapore government, the constitutional safeguards that protect Temasek's reserves, and its shareholding interest in some sectors that Standard & Poor's believe are strategic for the Singaporean economy. The government made net capital injection of S$10 billion into Temasek during the fiscal year ended March 31, 2008. However, it said about one-third of Temasek's investments are exposed to the financial sector, which adds volatility to its investment portfolio. In addition, its exposure to emerging Asia has grown over the past few years, adding higher country, legal, and regulatory risks to its portfolio. S&P expected this exposure to continue, in light of the announced refinement of its long-term directional portfolio mix: Asia-ex Singapore (40%), Singapore (30%), OECD (20%), and other geographies such as Latin America, Russia, and Africa (10%). Nevertheless, its liquidity, low leverage, and exceptional financial flexibility have so far compensated for these risks.
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