Bloomberg News

Temasek, Khazanah Said to Seek S$5 Billion in Property Loans

November 18, 2011

(Updates to include ANZ in bank group in eighth paragraph.)

Nov. 17 (Bloomberg) -- Temasek Holdings Pte and Khazanah Nasional Bhd., the state-owned investment companies of Singapore and Malaysia, hired banks to arrange S$5 billion ($3.9 billion) of property development loans, according to two people familiar with the matter.

At least nine lenders will contribute to the five-year bullet facility, which will pay a so-called all-in fee of 100 basis points over benchmark rates, one of the people said yesterday, asking not to be identified as details are private.

Khazanah and Temasek said in June they would jointly develop $9.8 billion of projects in southern Malaysia and Singapore. Some S$11 billion of Singapore developments will include hotels, apartments, offices and shops in 501,020 square meters (5.4 million square feet) of space in two main areas of the city’s downtown. The 3 billion ringgit ($952 million) of projects in Malaysia’s Iskandar region will have homes, retail space and “wellness-related offerings,” the companies said.

“The outlook for Singapore right now is looking a little soft because it’s an open economy and exposed to what’s going on in Europe,” Euben Paracuelles, a Singapore-based economist at Nomura Holdings Inc., said in a phone interview yesterday. “A deeper relationship with Malaysia could result in a few extra percentage points of growth over the next five years.”

Serena Khoo, a spokeswoman for Temasek, declined to comment. Mohd Asuki Abas, a Khazanah spokesman, declined to comment, saying the company does not comment on speculation.

Closer Links

The property agreement between Khazanah and Temasek earlier this year came as Malaysia agreed to move its railway station in the city-state’s central business district to a northern Singapore site close to a bridge that connects the two countries, ending a decades-old dispute over land usage. The two nations, united between 1963 and 1965, have also bickered over other issues such as the price Singapore pays for water from Malaysia.

The joint venture for the Singapore developments, M+S Pte, will be 60 percent owned by Khazanah and 40 percent by Temasek. The Malaysian project will be run through a 50-50 venture.

Banks arranging the Khazanah and Temasek loans include DBS Group Holdings Ltd., HSBC Holdings Plc, Oversea-Chinese Banking Corp., Malayan Banking Bhd., Bank of Tokyo-Mitsubishi UFJ Ltd., Standard Chartered Plc, Sumitomo Mitsui Banking Corp. and United Overseas Bank Ltd., one of the people said. Australia & New Zealand Banking Group Ltd. is also joining the group, a person familiar with its plans said today.

Record Loans

Lenders are currently working through internal credit approvals and the loan is expected to be signed next year, one of the people said.

Syndicated loans in Singapore this year are the highest on record with $33.9 billion of facilities signed since December, according to data compiled by Bloomberg. Loans totaled $20.9 billion for the whole of 2010, according to the figures, which go back to 1999. DBS has arranged the most loans this year, followed by OCBC and HSBC.

The biggest loan in the city-state this year to date is a S$4 billion facility for Resorts World at Sentosa Pte Ltd., a unit of Malaysia’s Genting Bhd. Proceeds were used to repay loans signed in 2008 that helped fund the $4.7 billion Resorts World Sentosa, Singapore’s first casino.

A bullet loan is a loan where a payment of the entire principal of the loan, and sometimes the principal and interest, is due at the end of the loan term.

--With assistance from Ranjeetha Pakiam in Kuala Lumpur. Editors: Lars Klemming, Ovais Subhani.

To contact the reporter on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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