Temasek unit Azalea is back with another PE-based bond offering – Astrea 9

Azalea Asset Management, an indirect subsidiary of Temasek Holdings, will be launching a new series of bonds backed by 40 private equity (PE) funds.

The indicative total size of the new issuance, Astrea 9 Private Equity Bonds, is US$780 million. It is about 48 per cent of the underlying PE portfolio valued at US$1.63 billion as at end-December 2024.

The funds invested in 1,086 companies in industries ranging from information technology and industrials to healthcare, financials and consumer discretionary.

The coupon rates of the bonds will be announced later.

The issuance will have three classes of bonds: A-1, A-2 and B Payment-in-Kind (PIK). However, only Class A-1 and A-2 bonds will be made available to retail investors, according to a preliminary prospectus lodged on Tuesday (Jul 22) at the Monetary Authority of Singapore’s Opera site.

The indicative size of the lowest-risk tranche of Class A-1 bonds is S$615 million, comprising S$400 million for the public offer and a placement of another S$215 million to institutions and other investors.

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The Class A-1 tranche is expected to be rated A+sf by Fitch Ratings; the Class A-2 tranche is expected to be rated Asf. The “sf” suffix refers to structured financial instrument.

The indicative size of the Class A-2 bonds is US$200 million. It comprises US$50 million for the public offer and a placement of another US$150 million.

Both classes of bonds are subject to a mandatory call after five years in 2030 and legal maturity of 15 years in 2040.

Based on the tentative timeline in the prospectus, the public offer for Class A-1 and A-2 bonds will open for applications on Jul 31 at 9 am and close at noon on Aug 6. The minimum application for retail is S$2,000.

The issuance of the Class B PIK bonds has an indicative size of US$100 million, all of which will be offered to institutions and other investors through a placement. The Class B bonds do not have a scheduled call date, and are expected to mature in August 2040.

The expected rating for the Class B PIK tranche is BBBsf by Fitch.