Unless you’ve been living under a rock – you probably know that the new Astrea 9 Private Equity (PE) bonds are back.
3.4% yield on the Class A-1 SGD Bonds.
5.7% yield on the Class A-2 SGD Bonds.
Yes I know the headline yield numbers are not as good as Astrea 8.
But that’s ALSO because interest rates today are lower than they were during Astrea 8 last year.
Whatever the case, I’ve bought almost every Astrea Bonds since they started being made available to the public.
So wanted to do a deep dive into the Astrea 9 PE Bonds – and discuss whether I would buy the Astrea 9 Bonds, and if so which tranche.
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What are the Astrea 9 PE Bonds?
At a high level:
Astrea 9 offers three classes of bonds, Class A-1, A-2 and Class B PIK backed by cash flows from a quality diversified portfolio of PE Funds managed by reputable GPs.
Only Class A-1 Bonds and Class A-2 Bonds are offered to retail investors in Singapore.
[Key features include]
- Over-collateralisation – portfolio NAV more than twice of total bonds issued
- Quality diversified portfolio of 40 PE Funds across 6 vintage years and 1,086 investee companies
- Mature, cash generative portfolio with 5.5 years weighted average age
- Structural safeguards in place
- Sponsor (Azalea Group) holds 100% equity interest
Prospectus is here if you are keen.
What are the key features of the Astrea 9 PE Bonds?
There are 2 tranches made available to public investors.
Class A-1 which is the SGD tranche.
Class A-2 which is the USD tranche.
Both rank pari passu (lawyer speak for equally) to each other, which means the risk profile for both are the same.
More details on each class below:
| Class | Principal Amount | Interest Rate | Scheduled Call Date | Interest Rate Step-up | Expected Ratings (Fitch1) | Maturity Date |
| Class A-1 | S$615 million (US$480) million • Public offer: S$380m • Placement: S$235m | 3.40% p.a. | 8 August 2030 (5 Years) | 1.0% p.a. | A+sf | 8 August 2040 |
| Class A-2 | US$200 million • Public offer: US$50m • Placement: US$150m | 5.70% p.a. | 8 August 2030 (5 Years) | 1.0% p.a. | Asf | 8 August 2040 |
| Subtotal | US$680 million | |||||
| Class B PIK | US$100 million | 7.35% PIK | n/a | n/a | BBBsf | 8 August 2040 |
| Total | US$780 million | |||||
Class A-1 Bonds – S$380m Class A-1 Bonds offered to retail investors in Singapore (Stock Code: YA1B)
- Cash reserved every 6 months to repay principal of Class A-1 bonds
- Mandatory Call at end of Year 5 (8 August 2030), if the Class A-1 Call Date Exercise Conditions are met
- Fixed interest of 3.4% p.a. payable every six months
- 1.0% p.a. one-time interest rate step-up if bond is not redeemed after 5 years
- Class A-1 and Class A-2 rank equally to each other (pari passu)
Class A-2 Bonds – US$50m Class A-2 Bonds offered to retail investors in Singapore (Stock Code: YA2B)
- Cash reserved every 6 months to repay principal of Class A-2 bonds
- Mandatory Call at end of Year 5 (8 August 2030), if the Class A-2 Call Date Exercise Conditions are met
- Fixed interest of 5.7% p.a. payable every six months
- 1.0% p.a. one-time interest rate step-up if bond is not redeemed after 5 years
- Class A-1 and Class A-2 rank equally to each other (pari passu)
How attractive is the yield on the Astrea 9 PE Bonds?
The yield spread on the prior Astrea Bonds for reference (yes I know the 10 year yield is not the perfect benchmark as these are 5 / 15 year bonds, but let’s stay big picture here).
Generally speaking, we see 1.1 – 1.9% yield spreads.
| Series | Date | Yield | 10 year SSB at the time | Yield spread vs 10 year SSB |
| Astrea IV | June 2018 | 4.35% | 2.43% | 1.92% |
| Astrea V | June 2019 | 3.85% | 2.13% | 1.72% |
| Astrea VI | March 2021 | 3.0% | 1.15% | 1.85% |
| Astrea 7 | May 2022 | 4.125% | 2.53% | 1.595% |
| Astrea 8 | July 2024 | 4.35% | 3.19% | 1.16% |
Running the same numbers today:
- SG 10 year yield is 2.09% – 1.31% yield spread for Class A-1 SGD Bonds
- US 10 year yield is 4.35% – 1.35% yield spread for Class A-2 USD Bonds
Viewed this way, the yield spread (which is the compensation you are getting for the risk you are taking on).
Is generally the same for the Class A-1 and Class A-2 bonds.
This is fair.
So the biggest concern for investors I suppose is whether you are comfortable with the USD FX risk.
USD FX Risk worth it for the higher yield for Astrea 9 Bonds?
This is what the USD/SGD FX pair looks like over the past 10 years.
It used to trade in a range between 1.3 – 1.45.
But recently with Trump in office, the USD has dropped to a record low of 1.27ish.
How will this play out over the rest of Trump’s term?
Boy… that is a really tough question, and I am not ashamed to say I have no clue.
With all the moves coming out of the Trump administration on record budget deficits (money printing), and a global concerted move away from the USD, I can easily see a big USD depreciation the next few years.
And yet with all the doom and gloom over the USD, and how extended positioning is, I could also see a contrarian rally in the USD.
Really tough call.
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What are the structural safeguards in place for the Astrea 9 PE Bonds?
Let’s discuss the structural safeguards for the Astrea 9 before I share my views on what I will buy.
High level, the safeguards are:
Reserves Accounts
Cash build-up to repay principal amounts of Class A-1 Bonds and Class A-2 Bonds on 8 August 2030 at the earliest
Maximum Loan-to-Value (LTV) Ratio
Crossing the Class A Total Net Debt limit of 50% triggers the lowering of debt level
Crossing the Class A and Class B PIK Total Net Debt limit of 55% triggers the lowering of debt level
Credit Facility
To fund certain expenses and capital calls for fund investments, if cash flow shortfall occurs
Underlying Portfolio for Astrea 9 isdiversified
To put it this way, Astrea takes an underlying portfolio of:
- US$1.6 billion worth of PE Funds
- Across 40 PE Funds
- With investments in 1086 underlying companies
You can see more about the underlying portfolio below, but long story short is that it is highly diversified.
And on top of that, the Astrea Class A-1 and Class A-2 bonds are 41.8% LTV ratio.
Which effectively means that you need about 60% of the underlying portfolio to “go bad”, before the Bonds will start to get impacted.
Astrea 9 Transaction Portfolio
The quality Transaction Portfolio is diversified across 40 PE Fund Investments, managed by 31 GPs and invested across 1,086 Investee Companies. The Transaction Portfolio has a weighted average fund age of 5.5 years and is mature and can be cash generative. The Net Asset Value, Undrawn Capital Commitments, Total Exposure and Capital Commitments are based on available reported figures as of 31 December 2024.
| Number of PE Funds | 40 |
| Number of GPs | 31 |
| Number of Investee Companies (as of 31 December 2024) | 1,086 |
| Weighted Average Age | 5.5 years |
| Range of Vintage Years | 2017 – 2022 |
| US$m | |
| Net Asset Value (NAV) | $1,625.2 |
| Undrawn Capital Commitments | $303.7 |
| Total Exposure | $1,928.9 |
| Capital Commitments | $1,609.2 |
What does this mean in Plain English? What is the risk of default?
It’s fairly clear these Astrea bonds are not zero risk.
If you want zero risk, buy a Singapore Savings Bond or a Fixed Deposit within the SDIC limits.
But I’ve said this in previous Astrea Bonds, and I’ll say this again.
I think all the structural safeguards in place for Astrea 9, bring the risk down materially:
- Highly diversified underlying portfolio
- Reserves Account
- Maximum LTV
- Credit Facility
Yes I know there is always someone who will say that the underlying is PE Funds which is a blackbox and highly leveraged, and if 2008 happens again it is possible that all the PE Funds will default at the same time.
Like I said, it’s not zero risk, so you need to assess what is the risk of something like that happening.
Will I buy the Astrea 9 PE Bonds?
Personal view here.
I bought every Astrea PE Bond series since they were made available to the public, and I don’t see this time as any different.
I’ll buy the Astrea 9 Bonds again, the only question is would I buy the Class A-1 SGD Bonds, or the Class A-2 SGD Bonds, or both?
Balloting for Astrea 8 Bonds
This was the balloting results for the Astrea 8 Bonds for reference.
Anyone applying up to $9000 for the Class A-1 SGD Bonds got what they applied for.
Anyone applying up to US$4,000 of the Class A-2 USD Bonds got what they applied for (mainly because of smaller offer size of the USD tranche).
What will I do for Astrea 9 PE Bonds?
This time around, the public offer for the Class A-1 SGD Bonds is again much larger than the Class A-2 tranche again, so we may see something similar again.
Funnily enough I have a whole bunch of Singapore Savings Bonds from 1 – 2 years back that yield 3%+ yields that I can redeem any time, and are completely risk free.
So viewed that way I find it hard to get really excited by 3.4% on a 5 year bond that is not risk free.
But that being said, I completely get that interest rates today are not where they were 1 – 2 years ago, so objectively 3.4% on a somewhat low risk bond is still a decent buy.
| Class | Principal Amount | Interest Rate | Scheduled Call Date | Interest Rate Step-up | Expected Ratings (Fitch1) | Maturity Date |
| Class A-1 | S$615 million (US$480) million • Public offer: S$380m • Placement: S$235m | 3.40% p.a. | 8 August 2030 (5 Years) | 1.0% p.a. | A+sf | 8 August 2040 |
| Class A-2 | US$200 million • Public offer: US$50m • Placement: US$150m | 5.70% p.a. | 8 August 2030 (5 Years) | 1.0% p.a. | Asf | 8 August 2040 |
I haven’t made up my mind fully, but I’m inclined to only apply for the Class A-1 SGD Astrea 9 bonds this time around.
The problem with the USD bonds is that the allotment is not meaningful enough to allot a good chunk of cash there. What am I gonna do with a few thousand in USD bonds lying around?
The other problem is that the Class A-2 Astrea 9 Bonds is not SGD hedged.
It really doesn’t make sense to take on the USD risk, for a fixed upside, for a small amount of funds.
Whereas with SGD bonds at least it just forms part of my overall SGD cash allocation, and 3.4% while low is still higher than other low risk alternatives today.
So that’s how I’m thinking of approaching the Astrea 9 PE Bonds, but I would love to hear what you think.
Note that if you buy the Class A-2 USD bonds, the exchange rate is 1.2852 per USD, which is actually lower than the USD rate today (1.2975 as at time of writing).
So that’s a small benefit if you decide to go with the Class A-2 USD bonds too.
How to apply for the Astrea 9 PE Bonds?
If you’re keen to apply, the public offer for Astrea 9 is already open.
Closing date is Wed, 6 August at noon, so do make sure to get your applications in before then.
Application is per any normal IPO – via any of the 3 local banks.
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Understand where the global economy is headed—and why it matters for your wallet. - Regular Buy/Sell updates from my personal portfolio
See exactly what I’m adding to (or trimming from) my portfolio and act before the crowd. - Comprehensive Watchlists
Full stock & REIT watchlists, updated regularly with target prices, entry zones, and risk considerations. - My Personal Portfolio
Transparent tracking of every position I hold—and why—so you learn the “what, why, and how” of smart investing.
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Not worth the effort
Fair enough! Pretty decent numbers though.
Basically taking equity risk against a PE portfolio of which ratings/investment criteria/asset quality are not very clear to us.. At spreads of ~1% above respective risk free rates of both USD and SGD, and with tenors potentially stretching up to 15Y.. didn’t seem like a good trade to me. Look forward to hear how FH/other FH-ers feel about this.
I thought it was decent as an alternative to bond funds. It’s not like I am putting a good chunk of my net worth in anyway. I myself applied, and got a small allotment.