The Credit Cheatsheet – Achieve around 4% yields with these SGD bonds

Up to Date with Rates

• In the May meeting, the Bank of England (“BoE”) announced the decision to lower borrowing costs by 25 basis points to 4.25%. This was largely motivated by the impact of the tariffs on British exports as well as a potential global economic slowdown.
• The Bank of Japan (“BoJ”) kept the key policy rate at 0.5% in the April 30-May 1 meeting. BoJ also cut its growth forecasts, suggesting uncertainty surrounding US tariffs and their impact on exports may keep its policies on hold for some time.
• The Federal Reserve decided to leave the Federal Funds target range unchanged in the May meeting, with the rates kept between 4.25% to 4.50%, as widely expected. The press conference provided little forward guidance and nothing new, compared to the March meeting. Powell reaffirmed that the Fed is in a good place as the US economy remains solid, expressing that the right approach is to wait for further clarity, given ongoing uncertainties. Importantly, he highlighted that the Fed is not in a position to act pre-emptively, unlike the 2019 rate cuts. Regarding Trump’s tariffs, Powell remains cautious and stressed that it is too early to discern the potential inflationary impact from the tariffs.
• Overall, Powell’s comments and the hawkish undertones support our belief that the Fed is comfortable holding rates at current levels. We think the Fed’s acknowledgement of higher stagflation risks (and the conflict on its dual mandate) signals that they are cautious and will need more time to assess macro data before deciding to cut rates. When asked about the conflict between price stability and maximum sustainable employment, Powell mentioned that “without price stability, we cannot achieve the long periods of labour market strength”, suggesting that inflation is still a key priority in this battle.
• For the period from 25 April to 27 May, the 2-year Singapore Overnight Rate Average-Overnight Index Swap (“SORA-OIS”) decreased by 9.1 basis points to 1.6975%, the 5-year SORA-OIS decreased by 0.2 bps to 1.9035% and the 10-year SORA-OIS increased by 4.5 bps to 2.2425%.
• Over the same period, yields for both the 6-month and 1-year SGD T-bills remained the same at 2.59% and 2.35% respectively. The 5-year Singapore Government Securities dipped by 13 bps to 2.07%, while the 10-year Singapore Government Securities decreased by 10 bps to 2.41%. In the recent 6-month T-bills auctions, the bid-to-cover ratio were at a low, consistently below 2.50x levels over the past few auctions. We believe the potential of a slowing economy drives the drop in overall interest rates, adding downward pressures on the cut-off yields, which saw the latest cut-off yield falling to 2.20% in the latest 22 May auction.

Favourite Bond Investment Ideas

• OUESP 4.000% 08Oct2029 Corp (SGD) – One of the highest-yielding medium-term SGD real estate developer bonds

We see compelling value in OUESP 4.000% 08Oct2029 Corp (SGD), offering an attractive ~4.0% yield—one of the highest among SGD real estate developer bonds today. Currently trading 30–80bps wider than peers with similar maturities, OUESP stands out as an opportunity to lock in a premium yield.

In our view, OUE’s credit fundamentals remain comparable to other developers, making the relatively higher yield an opportunity. Looking ahead, we expect OUE’s profit base to stay resilient, driven by its core real estate segment which is underpinned by OUE REIT’s high-quality, Singapore-focused portfolio. While OUE’s Healthcare segment— also major holder of manager for First REIT— may see some near-term income volatility as the REIT executes its Growth 2.0 strategy, we view this as part of a longer-term value creation roadmap aimed at reweighting towards developed markets (targeting >50% AUM by FY27, from ~25.5% currently).

Related article: Idea of the week: One of the highest-yielding medium-term SGD real estate developer bonds

• IREGLB 6.000% 22May2028 Corp (SGD) – Diversifying its tenant mix for greater portfolio resilience

We view IREIT’s new bond issuance with a 5.8% yield offering as an attractive high-yield opportunity in the SGD bond space. Compared to other SGD REIT issuers with similar tenors—currently yielding just 2.5% to 3.2%—IREIT’s 5.8% stands out with a significant yield premium. This higher yield largely reflects the expected unrated status of the issuance, whereas many peers benefit from tighter credit spreads due to their investment-grade ratings.

For investors who are comfortable taking on slightly higher credit risk, IREIT’s 5.8% yield  presents a compelling risk-reward trade-off. The use of the proceeds from the bond issue is for the major repositioning of its largest asset - Berlin Campus —from a single-use, single-tenanted property into a vibrant, mixed-use, multi-tenanted asset. Located near Ostkreuz station and the Mediaspree district, the campus is well-positioned to capture future demand. The project, which has now received its building permit (April 2025), is scheduled to commence construction in 2Q25. Encouragingly, long-term (20-year) leases have already been secured with two hospitality operators—Premier Inn and Stayery—covering 24% of lettable space and accounting for ~45% of the asset’s original annual rental income. This strong rental uplift signals market confidence and supports the potential for favourable leasing momentum post-upgrade.

Related article: IREIT Global announces SGD 3Y senior unsecured notes at IPG of 6.25%

• TMGSP 5.500% 31May2028 Corp (SGD) and TMGSP 4.650% 29Oct2029 Corp (SGD) – Stable operating cash flows

We like Thomson Medical Group (“Thomson Medical”)’s 2028 and 2029 SGD bonds which are offering around 4.3% - 4.5% yield. Thomson Medical reported an 18% YoY jump in revenue to SGD 199.1m in 1HFY25 (1HFY24: SGD 168.1m). The Group recorded a 2% YoY increase in EBITDA but a net loss of SGD 12.6m in the same period. The loss was largely attributed to weaker revenue contribution from the Malaysia business and a spike in finance costs post-acquisition of the Far East Medical Vietnam Limited– something which we had expected. Looking forward, we expect revenue to improve and for full-year earnings to turn positive, given valuation gains from its 9.2 hectares of freehold land in Johor Bahru.

Thomson Medical’s credit metrics have weakened in FY24, but it was widely anticipated with the Vietnam Hospital acquisition. Generally, credit metrics have not seen significant deterioration or improvement over the past twelve months. For 1HFY25, the total debt-to-asset ratio remains unchanged at around 60%, the net debt-to-EBITDA ratio dipped slightly to 9.3x (1HFY24: 9.7x) while the EBITDA-interest coverage ratio has declined to 1.7x (1HFY24: 2.3x). The Group continues to report stable operating cashflow (before changes in working capital), as with its past results. Overall, we do not see any concerns for upcoming maturing debt as seen from the Group’s ability to roll over secured bank loans.

Related article: Six ideas that offer above 4% yield for your maturing SGD bonds

• BACR 8.300% Perpetual Corp (SGD) – Healthy 1Q25 results, with improved capital buffer

The BACR 8.300% Perpetual Corp (SGD) has been a popular choice amongst local investors. The note stands out for its decent yield to call and high reset margins at 5.641% – increasing the already-high likelihood of redemption upon the first call date. Relative to its other SGD banking perps, we believe Barclays offers an attractive yield to call of around 5.7%. That said, investors should still consider the possibility of a non-call scenario before investing in perpetual securities.

Barclays delivered a robust financial performance in the 1Q25, marked by strong capital and liquidity positions, as well as significant growth in its investment banking division. The bank's Common Equity Tier 1 (CET1) ratio improved to 13.9% as of 1Q25, up from 13.6% at the end of December 2024. This increase provides a buffer of ~170 basis points above the expected minimum distributable amount requirement of 12.2% applicable in 1Q25. Management continues to target a CET1 ratio within the range of 13% to 14% over FY25 and FY26. Barclays' liquidity position remains strong, with the average Liquidity Coverage Ratio (LCR) rising to 175% in 1Q25 from 172% in FY2024, and the Net Stable Funding Ratio (NSFR) increasing to 136% from 135%. The bank's high-quality liquid assets (HQLA) grew to GBP 336 billion (FY24: 297 billion), covering ~60% of the total deposit base.

Related article: Idea of the Week – Here’s another UK bank looking great

Hot New Issues

Table 1

Covered new issuances over the past weeks

Corporate Updates You Should Know

• 19 May 2025 - Lendlease Group (“LLC”) has unveiled a 50:50 joint venture with The Crown Estate, a UK entity that returns profits to the government. Through this deal, LLC will unlock over AUD 300 million from its long-term international development portfolio and reduce future funding commitments by half to around AUD 125 million, while still fulfilling its current master planning and site enablement roles. The transaction is expected to release capital at slightly above book value and improve earnings via lower funding needs and new management fees.
• With this move, LLC has now announced or completed AUD 2.5 billion in capital recycling initiatives in FY2025—close to its AUD 2.8 billion target. In a separate update, LLC also secured a new AUD 1.2 billion investment mandate to manage Aurora Place in Sydney, lifting its Australian office assets under management to approximately AUD 20 billion. These developments align with LLC’s May 2024 strategy to free up capital through partnerships, JVs, and land sales while maximising portfolio value.

• 21 May 2025 - ABN Amro Bank N.V. (“ABN”) has announced that the Dutch government, via its investment arm Stichting administratiekantoor beheer financiële instellingen (NLFI), has reduced its stake ABN to below 30%. This move follows its announcement in mid-October 2024 of plans to bring its holding down to around 30% by selling depositary receipts for ABN shares.
• Since early December 2023, the government has been gradually cutting its stake through pre-arranged trading plans. NLFI, which is affiliated with the Ministry of Finance, manages the government’s holdings in ABN, consisting of both shares and depositary receipts.
• With its ownership now below the one-third threshold, the government loses certain special rights — including the ability to approve major investments, divestments, or capital raisings exceeding 10% of ABN’s equity (around EUR 50 million). These rights were tied to holding at least a one-third stake. Nonetheless, a protective mechanism remains in place to guard against hostile takeovers, as noted by NLFI spokesperson Bas van der Waals in October 2024. Under this structure, NLFI can temporarily suspend voting rights of shareholders if needed.

• 21 May 2025 – CapitaLand Investment Limited (“CLI”) has launched its first onshore master fund in China—the CLI RMB Master Fund—with a total equity commitment of RMB5 billion, anchored by a major domestic insurance firm. This move aligns with CLI’s asset-light strategy, continuing its fundraising momentum in China. Since 2021, CLI has secured RMB54 billion across seven RMB-denominated funds. The new master fund is expected to add RMB20 billion (~SGD3.7 billion) to CLI’s SGD117 billion AUM (as of 1Q2025) once fully deployed. It will invest via multiple sub-funds in high-quality, income-generating assets such as business parks, retail, rental housing, and serviced residences in key Chinese cities. Future sub-funds may also target sectors like data centres, logistics, and offices.

• 21 May 2025 – Singapore Post Limited (“SingPost”) has appointed Ms Teo Swee Lian as its new Chairman-designate and Non-Independent Non-Executive Director, effective 21 May 2025. She will take over from Mr Simon Israel, who is retiring after nine years as Chairman. Ms Teo brings extensive leadership experience, having previously held board roles at Singapore Telecommunications and AIA Group, and currently serving as Chairman of CapitaLand Integrated Commercial Trust Management, as well as a director at HSBC Holdings and Clifford Capital Holdings.
• With over 27 years of experience at the Monetary Authority of Singapore, she will lead SingPost’s Board through its ongoing Strategic Reset as the company transforms to meet the demands of the modern postal, eCommerce, and logistics sectors. Additionally, she will join the Finance and Investment, Compensation, and Nominations and Corporate Governance Committees.

Declaration: For specific disclosure, at the time of publication of this report, the analyst who produced this report holds a NIL position in the abovementioned securities. IFPL (via its connected and associated entities) holds positions in BACR 8.300% Perpetual Corp (SGD), TMGSP 4.650% 29Oct2029 Corp (SGD) and TMGSP 5.500% 31May2028 Corp (SGD).