Singapore: Thomson Medical sells maiden bond

Roy Quek, chief executive, Thomson Medical Group

In its first foray into the bond market, Thomson Medical Group, Singapore’s second-largest healthcare group, has sold a S$225m (US$165.8m) three-year bond at 4.8%.

The bond sale is off a S$500m (US$360m) multi-currency debt programme that it set up at the start of the month.

Guidance went out at low 5% area.

Unsurprisingly, demand for the paper was what Thomson called “robust” and the book was covered twice. “We are pleased that our maiden bond offering has been well received by investors in the market,” said chief financial officer Wilson Sam.

One banker away from the deal pointed out that issues from the healthcare industry in Singapore are rarely seen and called it “a good avenue for exposure in the healthcare industry”.

After divesting its real estate business, Thomson Medical is now a pure healthcare service provider known for its focus on O&G and paediatrics. Still majority-owned by billionaire Peter Lim, it has a number of projects underway in Singapore and Malaysia.

Proceeds will be used to pay down some of the group’s S$240m debt which is due by the end of the year.

Bankers away from the deal said that the pricing was fair.

Comps on the deal are not completely straightforward. The only other Singapore-based healthcare provider with unrated Singapore dollar bonds is Fullerton Health. It printed a two-tranche Reg S S$100m bond in June 2016. The five-year non-call three portion went at 2.45% while the seven-year non-call three portion priced at 2.75%. The paper was last seen at 2.42% and 2.59% respectively.

But that is not especially helpful. The Fullerton paper was wrapped by the Credit Guarantee and Investment Facility, a trust of the Asian Development Bank, hence the low coupon.

A more useful benchmark comes from hospital operator Parkway Pantai. In July 2017 it sold a US$500m Reg S perpetual non-call five at 4.25% off its US$2bn multicurrency programme. Although it is also unrated, Parkway is the largest operating subsidiary of IHH Healthcare. That bond is currently trading at a midpoint of 4.24% which, bankers say, gives an implied yield of sub-4% when swapped into Singapore dollars.

DBS was sole global coordinator as well as joint bookrunner along with Credit Suisse and Maybank Kim Eng Securities.