Temasek Financial (I) Limited (“TFin-I”), a wholly-owned subsidiary of Temasek Holdings, will launch a three-tranche offering of 10-year, 30.5-year and 50-year US dollar bonds under its global medium-term note programme.
Net proceeds arising from the issuance will be used by Temasek and its Investment Holding Companies to fund their ordinary course of business.
Moody’s assigns AAA ratings to Temasek’s proposed USD notes
In a separate statement today (29 September), Moody’s Investors Service said it has assigned Aaa ratings to the proposed 10-year, 30.5-year & 50-year USD notes.
As a government-related issuer, Temasek’s ratings benefit from its 100% ownership by the Government of Singapore through the Minister for Finance, although currently its baseline credit assessment — the measure of its standalone credit quality — is also positioned at AAA.
“Temasek’s AAA rating reflects its strong fundamental credit quality as an investment company, supported by steady and recurring dividend income, as well as its large and high-quality investment portfolio. In addition, Temasek’s largest investee companies and major dividend contributors have strong investment-grade credit profiles,” says Jacintha Poh, a Moody’s Vice President and Senior Credit Officer.
The AAA rating is also anchored by Temasek’s excellent liquidity, supported by its sizeable reserve of cash and liquid securities which Moody’s expects to be maintained.
Temasek has also been assigned an overall corporate credit rating of AAA by S&P Global Ratings.
In terms of environmental, social and governance (ESG) considerations, Temasek has indirect exposure to environmental risk through its investee companies. However, Temasek’s portfolio largely consists of companies that have low exposure to environmental risk. Sustainability of returns is integral to Temasek’s investment approach. Moody’s estimates that as of 31 March 2020, sectors that have elevated or moderate environmental risk accounted for only a small portion of Temasek’s portfolio and dividend income. The energy & resources sector account for only at about 2% of the portfolio.
Despite having a single shareholder, the governance risk for Temasek is largely mitigated by the oversight exercised by a board that consists of 10 independent directors out of a total 12 of directors and by Temasek’s track record of maintaining an extremely conservative financial profile.