Temasek Holdings, Singapore’s state investment company, raised $1 billion from the longest-dated local-currency bonds as it seeks to develop the island state’s capital markets.

 

Temasek sold 4.2% 40-year notes with help from DBS Group Holdings and Standard Chartered Plc, it said in a statement to the Singapore stock exchange. Before today its longest-maturity Singapore dollar bonds were the $300 million in 4.2% securities due 2039 it sold in December, according to data compiled by Bloomberg.

 

“When you create a yield curve like this for such a quality name it creates a curve for other borrowers to benchmark their deals against,” Brayan Lai, a Hong Kong-based credit analyst at Credit Agricole CIB, said in a telephone interview. “These bonds would effectively open the Singapore dollar capital markets.”

 

Companies issued US$24.9 billion ($34.3 billion) of notes due in 10 years or more last week, the most since the period ended March 22 according to Bloomberg data, as investors speculate inflation won’t spur central banks to raise interest rates. Singapore, which reported an 18.1% surge in gross domestic product in the first half, has used exchange rates rather than interest rates as its main tool to achieve price stability over the past three decades.

 

Temasek, ranked the top Aaa by Moody’s Investors Service and AAA by Standard & Poor’s, sold the 40-year notes “in response to enquiries from Singapore-based investors who were interested in Singapore dollar bonds with tenors longer than 30 years,” Treasury Head Alyssa Ong said in the statement.

 

The company sold 700 million pounds ($1.46 billion) of 30- and 12-year bonds on July 19 in its first sale in the U.K. currency. The extra yield investors demand to hold the 2022 notes rather than gilts has since fallen 9 basis points to 86 basis points, according to HSBC Holdings Plc prices. A basis point is 0.01 percentage point.

 

Temasek said in May 2009 that it wanted to establish a “series of different tenored bonds for a more robust and nuanced signal over the longer term.” Spokesman Tan Yong Meng declined to comment on its funding plans today.

 

Temasek’s new bonds will be the longest-dated in Singapore’s currency, Bloomberg data show. So-called perpetual notes sold by companies including Oversea-Chinese Banking Corp., United Overseas Bank and DBS don’t have maturity dates.

 

Founded in 1974 to foster development of the island’s banks, airlines and ports, Temasek owns shares of Singapore’s biggest bank and its largest telephone company.