Singapore's leading integrated communications services provider Singapore Telecommunications (Singtel) returned to the international capital markets after an absence of more than three years as it priced on June 23 a US$500 million issue as part of its long-term funding strategy.

The Reg S 10-year deal was priced at 98.863% with a coupon of 3.25% to offer a yield of 3.385% - equivalent to a spread of 97.5bp over the US treasuries. The make whole call option is at 15bp over the US treasuries.

The deal is part of SingTel's long-term financing strategy and to extend its debt maturity profile. The company's last foray in the US dollar bond market in March 2012 was a 5-1/2 year deal for US$700 million. That offering had a coupon of 2.375% with a re-offer yield of 2.415%.

The latest transaction, issued through Singtel Group Treasury (SGT), was met with strong demand from a wide range of high quality investors with an order book exceeding US$1.25 billion from 116 accounts. Singtel's group CFO Lim Cheng Cheng attributes such a response to confidence in the group's strong credit quality.

In terms of geographic distribution, 74% of the bonds were sold in Asia and 26% in Europe. Banks were the biggest buyers as they accounted for 58%, followed by fund managers with 34%, private banks 5%, and insurance companies and agency 3%.

The bonds were drawn from SGT's S$10 billion euro medium-term note programme and the proceeds will be used to fund the company's ordinary course of business.

Citi, HSBC, Mizuho Securities Asia and Morgan Stanley acted as the joint bookrunners and lead managers for the transaction.

Moody's Investors Service assistant vice-president and analyst Nidhi Dhruv expects Singtel to use majority of the bond proceeds to refinance its existing debt and as such will be broadly leverage neutral in the near term. Apart from extending its debt maturity profile, the offering will further strengthen the company's liquidity position.