Singapore Post (SingPost) said it will redeem an outstanding S$350mn 4.25% perpetual bond on the first call date of March 2 at par. However, it did not say how it will fund the redemption. IFR notes that the decision to call back the bond breaks a recent trend in the last couple of years where some issuers of SGD-denominated perpetuals decided not to call the bonds at the first call date and, instead, opted to reset the coupons at lower levels. This list included Ascott REIT which saw its S$250mn perpetual reset from a coupon of 4.68% to 3.07% in June 2020, followed by First REIT’s S$60m 5.68% perpetual which reset the coupon to 4.9817% in July 2021 and LMIRT that reset its S$140mn perpetual coupon from 7% to 6.4751%. However, unlike the times in 2020 and 2021, given that the 10Y benchmark SOR levels have spiked more than 80bp from 1.13% a year ago to 1.93% currently, “it makes more economic sense for the issuer to redeem the notes”, said IFR. Had SingPost not called the perpetuals, the coupon would have reset to 5.59% (10Y SOR + initial spread of 2.192% + coupon step-up of 1.5%).

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