The Singapore Exchange (SGX) has fully placed out &euro 240 million (S$386 million) of its zero coupon convertible bonds due March 1, 2024, with a " high-quality book of institutional investors" , hours after the proposed issue was announced on Monday evening (Feb 1).

 

In a pre-market filing on Tuesday, the bourse said its offer was oversubscribed. The bonds were placed out through its indirect wholly owned subsidiary, SGX Treasury I.

 

Payment of the three-year, zero-coupon bonds is fully guaranteed by SGX.

 

The bonds can be converted into ordinary shares of SGX at an initial conversion price of $13.0944, which is a 32 per cent premium over the closing price of $9.92 on Feb 1, 2021. This represents a negative yield to maturity of 0.331 per cent per annum, said SGX in its announcement.

 

The bourse intends to allocate about 80 per cent of the bond proceeds to refinance existing debt, while the remaining 20 per cent will be for general corporate purposes.

 

" We are pleased with the strong support from investors for our maiden convertible bond issue. The attractive terms underscore strong investor confidence in SGX' s credit fundamentals, solid business model and growth prospects. This issuance further diversifies our funding sources as we continue to identify strategic opportunities to drive growth across multiple asset classes," commented SGX chief executive Loh Boon Chye.

 

Credit Suisse and Morgan Stanley Asia have been appointed as the joint global coordinators and bookrunners for the issue.

 

OCBC Bank credit research analyst Ezien Hoo said convertible bonds issued by SGX-listed companies are relatively rare, with recent issuers being Singapore Airlines and Banyan Tree Holdings.

 

" Typically, a compelling equity story would be needed for investors to be happy to take a lower coupon rate. With equity markets in favour, it is likely that other corporates may attempt to come to market with a convertible bond," Ms Hoo told The Business Times on Monday evening.

 

THE Singapore Exchange (SGX) has launched its pioneering suite of environment, social and governance (ESG) derivatives under the SGX First (Future in Reshaping Sustainability Together) sustainability agenda, which was announced in December 2020.

 

The suite of four new derivatives comprises the SGX FTSE Emerging ESG Index Futures, the SGX FTSE Emerging Asia ESG Index Futures, the SGX FTSE Asia ex Japan ESG Index Futures and the SGX FTSE Blossom Japan Index Futures.

 

Together they mark a key thrust of the SGX First initiative and are designed to enable seamless adoption of ESG factors into investment portfolios, said SGX in a press statement on Monday.

 

According to the bourse, the indices are backed by major global pension funds and drawn from leading international standards. They provide a combination of improved ESG profile while maintaining risk and return characteristics largely similar to benchmark equity indices, said SGX.

 

All four contracts have been developed by SGX in partnership with FTSE Russell.

 

They are certified by the Commodity Futures Trading Commission, which means market participants can trade them directly from the US.

 

" Our leadership in developing a pan-Asia shelf of benchmark equity derivatives has placed us in a distinct position to drive the change the world needs to see today. Together with FTSE Russell' s strengths in investable multi-asset products and ESG, our offering of sustainable risk-management solutions in Asia is unrivalled," said Michael Syn, head of equities at SGX.

 

THE Singapore Exchange on Friday posted a net profit of S$239.8 million for the half year ended Dec 31, 2020, up 12 per cent from $213.3 million a year ago.

 

This came mainly from revenue increases across all three of its businesses: equities fixed income, currencies and commodities and data, connectivity and indices, it said in a regulatory filing.

 

Earnings per share stood at 22.4 Singapore cents for the quarter, up from 19.9 cents a year ago.

 

An interim quarterly dividend of 8 Singapore cents per share has been declared, up from 7.5 cents the previous year. The dividend will be paid on Feb 8. This brings total dividends for the half year to 16 Singapore cents per share, versus 15 cents in the previous year.

 

Revenue for H1 rose 9 per cent to S$520.8 million from S$478.5 million in the year-ago period.

 

Revenue from the fixed income, currencies and commodities segment rose 17 per cent to S$99.2 million, and accounted for 19 per cent of total revenue. Equities, which make up 67 per cent of total revenue, edged up 3 per cent to S$350.8 million.

 

On the data, connectivity and indices front, revenue was up 35 per cent to S$70.7 million and accounted for 14 per cent of total revenue.

 

SGX chief executive Loh Boon Chye said in statement on Friday that the first-half performance was " solid" , with growth from all three business segments amid an uncertain global environment.

 

" The heightened demand for China access and risk-management solutions, coupled with the early success of our expanded pan-Asia derivative product suite and higher trading activity in our stock market, led to stronger performance in our equities business. We have also grown our fixed income, currencies and commodities and data, connectivity and indices pillars, which now contribute a third of our revenues, bolstered by newly acquired BidFX and Scientific Beta."

 

He added that the bourse will continue to drive growth through strategic partnerships, client acquisitions and new product offerings such as ETFs covering equities and fixed income.

 

Sustainability capabilities and solutions as well as building up digital assets expertise are also among key priorities.

 

SGX separately announced on Friday that it has entered into a joint venture (JV) with Temasek to advance digital asset infrastructure in capital markets.

 

The JV is set to be Asia-Pacific' s first exchange-led digital asset venture focused on capital markets workflows through smart contracts, ledger and tokenisation technologies.

 

Singapore Exchange (SGX) and Temasek Holdings have, on Jan 22, entered into a joint venture (JV), which is set to be Asia Pacific&rsquo s (APAC) first exchange-led digital asset venture.

 

The venture will focus on capital markets workflows through smart contracts, as well as ledger and tokenisation technologies.

 

The partnership builds on the collaboration between SGX, Temasek and HSBC in August 2020, which lead to the issuance of Asia&rsquo s first public syndicated digital bond for Olam International, which totalled some $1 billion.

 

Through the JV, SGX will combine its multi-asset experience and strengths in operating market infrastructure, together with Temasek&rsquo s expertise in blockchain technology and ecosystem connectivity.

 

The JV will also explore partnerships with fixed income issuance platforms to connect to its post-trade and asset servicing infrastructure to provide issuers, arranger banks, lawyers, investors and paying agents with a comprehensive network for Asia bonds.

 

In addition, the JV will focus on other existing and emerging asset classes with a growing market demand including sustainable finance.

 

Lee Beng Hong, senior managing director, head of fixed income, currencies and commodities (FICC) at SGX says, &ldquo The early success in our digital bond issuance platform has paved the way for SGX to make a larger move into digital assets, and we are very excited to take our digital asset business to the next level in partnership with Temasek.&rdquo

 

&ldquo Together, we will capitalise on digitalisation trends that continue to shape global capital markets, and advance the development of capital markets infrastructure in Asia,&rdquo he adds.

 

Pradyumna Agrawal, managing director, Blockchain@Temasek, says, &ldquo We have been tracking the evolution of financial market systems and the opportunities for development of digital infrastructure that will transform how financial transactions are conducted. We are pleased to partner SGX in this effort towards continual improvement of capital markets through the development of innovative end-to-end digital asset solutions.&rdquo