Launching the New Private Equity Bond Series
Azalea Asset Management, an indirect subsidiary of Singapore’s Temasek Holdings, is set to launch its latest series of private equity-backed bonds, named Astrea 9. This forthcoming issuance, which has an indicative total size of US$780 million, is structured using cash flows from a diversified portfolio of 40 underlying private equity funds. These funds represent a significant industrial footprint, having invested across 1,086 companies in critical sectors such as information technology, industrials, healthcare, financials, and consumer discretionary, offering investors broad market exposure. The entire underlying portfolio of private equity investments was valued at US$1.63 billion as of the end of December 2024, meaning the new bonds represent approximately 48 percent of this total value. The launch demonstrates the firm’s commitment to providing access to the traditionally institutional-only private markets for a wider range of investors, building on the success of its preceding Astrea offerings.
Structured Bond Classes and Investor Accessibility
The Astrea 9 issuance will be divided into three distinct classes of bonds: Class A-1, Class A-2, and Class B Payment-in-Kind (PIK), each catering to different investor segments and risk appetites. Importantly for individual investors, only the Class A-1 and Class A-2 bonds will be made available to retail investors, following the preliminary prospectus lodged with the Monetary Authority of Singapore. The Class A-1 tranche, which is the lowest-risk offering, has an indicative size of S$615 million, with a S$400 million public offer component and a S$215 million placement reserved for institutions and other investors. This tranche is expected to receive an A+sf rating from Fitch Ratings. The Class A-2 bonds, while slightly higher in risk, are still expected to be highly rated at Asf and have an indicative size of US$200 million, including a US50millionpublicofferandaUS150 million placement. Both the A-1 and A-2 classes are designed with a mandatory call date after five years in 2030, and a final legal maturity set for 15 years in 2040. The inclusion of these retail tranches reflects a concerted effort by the issuer, Azalea, to democratize access to private equity-backed securities.
Key Timelines and Institutional Offerings
The tentative timeline outlined in the prospectus sets the public offer for both the Class A-1 and Class A-2 bonds to open for applications on July 31st at 9 am and subsequently close at noon on August 6th. This condensed application window requires prompt attention from prospective retail investors, who have a minimum application size of S$2,000 for participation. In contrast to the retail tranches, the Class B PIK bonds are exclusively targeted at institutional investors and other qualified investors. This final tranche has an indicative size of US$100 million and will be offered entirely through a placement without a public offer component. Unlike the A-class bonds, the Class B bonds do not feature a scheduled call date and share the same expected maturity of August 2040. Fitch Ratings anticipates a BBBsf rating for this institutional Class B PIK tranche. This tiered approach, structured by Azalea, ensures that while the complex’s strong underlying asset base is tapped for funding, the resulting investment products are clearly delineated by risk profile and intended investor base, maintaining the robust, easy to read nature of the overall investment structure.
