Singapore’s Keppel Corp has gone Japanese for its latest round of fundraising, according to a regulatory filing.
The world’s largest rig builder has made its debut in the Japanese bond market raising JPY 8bn ($75.4m) from its first samurai bond.
The five-year bond, which was arranged by Mizuho Securities Asia, will carry a fixed-rate coupon of 0.88% per annum, Keppel said.
The bonds are being issued under Keppel’s existing $5bn multi-currency medium term note programme, the company confirmed.
Keppel said the net proceeds from the bond issue will be used for general corporate or working capital purposes including refinancing of existing loans.
The company faces a SGD 500m ($365.7m) bond maturity on 12 October 2020 and analysts expect this samurai bond issue to go towards partly funding this.
The new bond is thought to offer significant cost savings for the Singapore-list company, according to the credit research team at OCBC Bank.
“In Singapore dollar terms the coupon would be around 1.73% versus an existing Keppel bond due in 2025 with a yield to maturity of 2.69%,” it added.
This is Keppel's second bond issue this year following the raising of SGD 250m in April from a five-year bond.
A samurai bond is typically a yen-denominated bond issued in Tokyo by a non-Japanese company and subject to Japanese regulations.
Companies tend to issue bonds in yen to capitalize on low Japanese interest rates, or to gain exposure to Japanese markets and investors.
Risks associated with raising capital in the Japanese currency can often be mitigated with cross-currency swaps and currency forwards.
Last week Keppel saw its shares dropped from Singapore investment bank UOB Kay Hian's share conviction list and replaced by China’s Yangzijiang Shipbuilding.
“With Temasek surprisingly abandoning the Keppel partial offer, we drop Keppel from the portfolio due to a lack of near-term catalysts,” UOB Kay Hian said of the decision.
