Temasek 2.7% 2023 Bonds - worth it?

[BBCWatcher]

I haven't checked UOB, but please note that both DBS/POSB and OCBC are barring U.S. persons from buying this Temasek bond. Barring the honest ones, anyway.

I don't know why! Yes, true, Temasek and its distributors (DBS/POSB, OCBC, and UOB) need to avoid marketing this bond to U.S. persons -- avoid taking out an ad in the Wall Street Journal promoting this bond, for example. But to my knowledge there's nothing in U.S. law or U.S. regulations that prohibits U.S. persons from buying this bond. And there's no requirement that Temasek bar U.S. persons from participation.

There's no such "Are you a U.S. person? Go away if so" restriction on Singapore Government Securities, including SSBs. So this is all very weird to me.

I don't particularly care for myself since this bond isn't tremendously interesting, but I happened to notice this bit of weirdness and point it out to anybody else that might care.

 

[cherry6]

From prospectus. Temasek likes to have lotsa spare cash floating about in bank?


At most they used only 22.957 billion to invest (2017-18), but their war chest is like $42-52+ billion over last 3 years (almost double what is needed), are they keeping too much $$$ given that they already have a ready line of credit whenever they want to borrow$$$ from banks etc?

So is this bond sale just a wayang show to show off to creditors that it can borrow $$$ for peanut interest?

 

[ELKYme]

My Guess why this is so is because this bond will be oversubscribed as the demand will far outweigh the supply. As such, the bond issuer wants Singaporeans to benefit rather than foreigners.

Win-win....if Singaporeans save more, the Gov wouldn’t need to do so much in future.

Disclaimer: Only guessing, no proof at all.

I haven't checked UOB, but please note that both DBS/POSB and OCBC are barring U.S. persons from buying this Temasek bond. Barring the honest ones, anyway.

I don't know why! Yes, true, Temasek and its distributors (DBS/POSB, OCBC, and UOB) need to avoid marketing this bond to U.S. persons -- avoid taking out an ad in the Wall Street Journal promoting this bond, for example. But to my knowledge there's nothing in U.S. law or U.S. regulations that prohibits U.S. persons from buying this bond. And there's no requirement that Temasek bar U.S. persons from participation.

There's no such "Are you a U.S. person? Go away if so" restriction on Singapore Government Securities, including SSBs. So this is all very weird to me.

I don't particularly care for myself since this bond isn't tremendously interesting, but I happened to notice this bit of weirdness and point it out to anybody else that might care.

 

[limster]

SEC Rule 15a-6?

 

[Mergui219067]

The fearful today must be having one of the most difficult days in their lives :

press or no press

 

[assiak71]

Press then sell off when listed? Provided the price covers the commission...

 

[BBCWatcher]

My Guess why this is so is because this bond will be oversubscribed as the demand will far outweigh the supply. As such, the bond issuer wants Singaporeans to benefit rather than foreigners.

No, that doesn't make any sense. If you want to prohibit "foreigners" from buying this bond, then do that. U.S. persons aren't going to be particularly, uniquely interested in this bond (sorry, Temasek, but it's just not that interesting), and there just aren't very many Americans who are residents of Singapore, with accounts at one of the big three Singapore banks, with mailing addresses in Singapore -- some of the other requirements.

Australia has similar non-marketing regulations as I understand it, there are more Australians in Singapore than Americans, and Temasek isn't barring Australians from participation.

It's REALLY weird. I can't figure it out. The prospectus cites SEC Regulation S, but to my knowledge Regulation S only applies to non-U.S. marketed securities when there is "substantial U.S. market interest" in them -- when there's some colorable (or greater) U.S. nexus. I cannot figure out why Temasek or its bank issuers think that a bond offered in Singapore to residents of Singapore with Singapore bank accounts and Singapore mailing addresses constitutes "substantial U.S. market interest." That's unfathomable to me.

There are a great many mythologies about U.S. persons and regulations associated with them, and it's quite possible Temasek and/or its bank partners suffer from some misunderstandings. There's nothing in U.S. laws and U.S. regulations that inhibits a company in Botswana from issuing bonds in Botswana advertised in Botswana to residents of Botswana with bank accounts in Botswana and mailing addresses in Botswana...who happen to be holding U.S. green cards. That's just silly, and the laws and regulations at least aren't that silly.

 

[cal3135]

Applied via i-bank .... lets see the allocation

 

[BBCWatcher]

Following up here, Regulation S provides a "SUSMI" ("Substantial U.S. Market Interest") safe harbor. If the issuer "reasonably believes" that there's no SUSMI, then the safe harbor exclusion applies without limitation or qualification. You can go ahead and market and sell your bonds in Botswana, or wherever. And if a U.S. person happens to buy $5,000 worth, or whatever, no problem.

There's also an "overseas directed offering" safe harbor, and that safe harbor certainly appears to apply here, too.

AND there's a "backed by the full faith and credit of a foreign government" safe harbor, although maybe we can forgive Temasek for deeming itself outside of that particular safe harbor since there's at least a question on that point.

My "best guess" is that some overzealous individual in Temasek's compliance department who has never had experience with retail bonds -- this is Temasek's first -- took some boilerplate language from their global institutional placements and dropped it into this domestic retail bond prospectus. There's absolutely no way this bond issue could ever have SUSMI. These T2023 Temasek bonds will have a questionably functioning Singapore secondary market, not any sort of "substantial" market interest on Wall Street.

It's crazy, really, but even the mighty Temasek isn't perfect.

 

[Mergui219067]

Every bit gets scrutinised by the fearful ones.

It is as if we are putting hundreds of millions in it.

 

[limster]

like i said earlier, how about SEC Rule 15a-6?

 

[BBCWatcher]

like i said earlier, how about SEC Rule 15a-6?

No, there's no broker-dealer here for purposes of SEC regulations, and that's for institutional investors anyway.

Just go to the prospectus for the rationale, such as it is. The prospectus cites Regulation S -- fair enough -- but then spins out of control and doesn't understand Regulation S's scope and safe harbor exclusions.

No big deal, I guess, but let's just chalk it up to Temasek not understanding how domestically (Singapore) marketed retail bonds work within U.S. SEC regulations -- it's a complete head scratcher. This is their first such attempt, after all, so I suppose it's understandable that they goofed on this little point. And now everybody who is participating in this bond has to click through a "You aren't a U.S. person" confusing double negative screening question that is completely unnecessary.

Maybe they'll do better next time and read these regulations more carefully, including especially the SUSMI part.

 

[funkypunk]

Perhaps the Reg S is there due to the institutional tranche?

 

[mummy1234]

Must apply by 12 noon today. For those interested.

 

[hwarzoner]

less than 30 mins left

 

[ysyj48]

should be same as SSB ~ 7.00am - 9.00pm, Mon - Sat, excluding Public Holidays.

I bought on ocbc atm on sat night , think its under the option "Electronic Share".

 

[limster]

PROHIBITIONS RELATING TO INTERSTATE COMMERCE AND THE MAILS
SEC. 5. (a) Unless a registration statement is in effect as to a
security, it shall be unlawful for any person, directly or indirectly—
(1) to make use of any means or instruments of transportation
or communication in interstate commerce or of the mails
to sell such security through the use or medium of any prospectus
or otherwise;....

Securities Act of 1933

The Temasek prospectus says that the Notes have not been registered under the US Securities Act of 1933.

Section 5 says the Notes have to be registered before you can sell to US citizens. Regulation S provides an exemption, so the default seems to be that they cannot sell unless Temasek can show they fall within the exemption. So why go through the hassle if its likely to be oversubscribed by non-US citizens anyway.

 

[Squaredot]

last few minutes to presss

 

[BBCWatcher]

Regulation S provides an exemption, so the default seems to be that they cannot sell unless Temasek can show they fall within the exemption.

No, there's no duty to show anything. There's no filing or other paperwork required -- nothing that Temasek needs to do. Regulation S tells you what the exemptions are, including the SUSMI safe harbor.

What Temasek and its issuers did do is impose an extra, unnecessary, confusing, double negative question on all retail investors trying to participate in this bond -- including Singaporeans who studied at a U.S. university (for example) and who are scratching their heads trying to figure out whether they fit into the definition of "U.S. person." This is all completely unnecessary and very inappropriate for retail investors.

....Temasek can and should do better next time.

 

[cherry6]

Just curious, if Temasek wants to borrow$$$, why can't just borrow in it's own company name, why must borrow/issue through some silly and mysterious shell (investment holding company) company which is it's subsidiary. Wouldn't it be more transparent and administratively expedient and thus save $$$ if Temasek didn't have so many shell companies and just borrowed in it's own name?

After all, iirc, the bonds are guaranteed by the parent Temasek holdings company in any case.

Isn't this a misuse of corporatisation? Why make things more complicated than they need to be?