Temasek to issue US$1.5b 10-year notes due in 2019 with 4.3% coupon (By Irene Chan, Channel NewsAsia | Posted: 20 October 2009 1307 hrs)
My first understanding of Bonds are those of public bonds. That is, Bonds are typically issued to raise money for public projects that require a high start-up cost. Or start a war. This article prompted me to find out that there are actually private bonds (makes sense). These tend to be used to finance a project for the same reasons, high start-up cost.
So, what bugs me about this Temasek offering (other that I am a raving anti-PAP government lunatic)?
Net proceeds from the offering will be provided to Temasek and its subsidiary companies to fund their ordinary course of business.
Temasek is an investment firm. We have already been told that its business is none of our business. So, as far as I can discern, it is taking this money raised to invest. Why does this feel wrong to me? It feels like a ponzi scheme ... "invest your money with me, so I can invest some more".
To be fair, given Temasek's record, it *should* be able to get returns on the money above the 4.3% it is offering to people buying this bond offer, so as a practical matter it seems sound. I guess I'm just more fiscally conservative ... I expect the raising of money from bonds to contribute to some clearly defined project, so investors in those bonds know exactly what they are getting themselves into. Right now, anyone buying these bonds will only know Temasek will invest it somewhere else ...