Temasek Financial launches 5, 10, and 30-year offshore CNY bonds

Temasek Financial launches 5, 10, and 30-year offshore CNY bonds

Singapore's sovereign wealth fund, Temasek Holdings, has made a strategic move by launching 5, 10, and 30-year offshore CNY bonds. This issuance, announced on July 2, 2025, is part of Temasek's broader strategy to diversify its funding sources and tap into Asia's burgeoning offshore RMB market.

The bonds, managed by four mandated banks—Credit Agricole, DBS, HSBC, and Standard Chartered—are rated Aaa by Moody's and AAA by S&P, reflecting Temasek's strong credit profile. This high rating allows the fund to issue bonds across multiple currencies, including offshore RMB, at historically favorable spreads.

The issuance aligns with China's efforts to expand the yuan's global footprint. In 2024, Temasek issued a 10-year CNH 1.0 billion bond at a 2.75% coupon and a 30-year CNH 1.7 billion bond at 3.10%, demonstrating the market's confidence in its creditworthiness [1].

The offshore RMB market, centered in Hong Kong, has seen a surge in activity in 2025, driven by China's efforts to expand the yuan's global footprint. Temasek's entry into this market aligns with broader trends: Chinese government agencies and state-owned enterprises have increased offshore RMB borrowings by 32% year-on-year in 2024, capitalizing on lower yuan interest rates compared to the U.S. dollar [2].

The 30-year tranche is particularly noteworthy. While long-dated bonds in offshore RMB markets are still nascent, Temasek's issuance could set a precedent for other high-quality issuers. By locking in low-cost financing for decades, Temasek reinforces its long-term investment horizon, which focuses on sustainable returns across global markets.

Temasek's offshore RMB bonds are priced to compete in a market where demand for yuan-denominated assets is surging. The Chinese Ministry of Finance's 2025 CNH 12.5 billion bond issuance, for example, was oversubscribed by 1.86 times, with coupons ranging from 1.75% to 2.37%. Temasek's offerings, while slightly higher in yield, provide a risk-adjusted return that appeals to investors seeking diversification away from dollar and euro-based assets.

For global investors, these bonds offer a unique opportunity to hedge against currency volatility while accessing a currency that is increasingly integrated into global portfolios. The guarantee by Temasek Holdings, coupled with its triple-A ratings, reduces counterparty risk, making these instruments a safe haven in an uncertain macroeconomic environment.

Temasek's offshore RMB strategy is a masterclass in leveraging credit ratings to access untapped liquidity. For investors, the bonds provide diversification, liquidity, and yield. For Temasek, the benefits are equally compelling. By diversifying its funding sources, the company reduces reliance on traditional dollar and euro markets, mitigating risks from interest rate hikes in developed economies. Additionally, the offshore RMB market's growth—fueled by China's policy support—ensures a steady pool of capital for future issuances.

As the offshore RMB market matures, investors should consider allocating a portion of their fixed-income portfolios to high-quality, sovereign-backed CNH bonds like Temasek's. However, investors must remain mindful of currency and regulatory risks.

References:
[1] https://www.ainvest.com/news/temasek-strategic-offshore-rmb-bonds-diversify-funding-attract-global-investors-2507/
[2] https://www.linkedin.com/posts/syafeeq-shukor_economy-genocide-temaseks-offshore-rmb-activity-7353293958275391488-s32C