Astrea 9 Private Equity Bonds: All You Need to Know (And How to Get Early Access)

Astrea Bonds are back! Temasek-linked Azalea Asset Management has just announced the launch of its latest private equity-backed bond offering — Astrea 9. If you're looking to invest for passive income, this is something you’ll want to pay attention to.

In this article, I’ll break down all you need to know about Astrea 9 bonds:

• What Are Astrea Bonds, and Why Are They Popular

• How Safe Are Astrea 9 Bonds

• What Are The Astrea 9 Bond Offers.

• How should You Consider Astrea 9 Bonds.

• How to Subscribe to Astrea 9 Bonds

What Are Astrea Bonds, and Why Do They Matter?

If you’ve been reading my blog for a while, you’ll know Astrea bonds aren’t new. But here’s a quick refresher.

Traditional bonds are debt instruments issued by governments or companies. Investors lend money to the issuer and in return, receive regular interest and the principal back at maturity. These are generally backed by the issuer’s financial strength and ongoing business operations.

Astrea bonds, however, are a different kind of bond. They’re backed by private equity funds, which typically require millions of dollars and are traditionally accessible only to institutions or ultra-high-net-worth individuals. The Astrea series makes this asset class available to everyday investors by packaging them into bonds that are tradable on SGX and pay fixed interest.

This makes private equity more accessible, liquid, and income-generating, ideal for long-term retirement-focused investors.

Astrea 9 Structure Diagram. Source: Astrea 9 Presale Report[/caption]

Why Are Astrea PE Bonds So Popular?

Because Astrea bonds are issued through a special-purpose vehicle (SPV), it can earn income from a diversified portfolio of private equity funds. It also means that Astrea bonds are higher risks compared to some traditional bonds. In return, the investors are compensated with a relatively higher yield at the time of the issuance.

Besides the yield, here are the reasons that investors like them:

1. Strong Backing and Ownership

Astrea bonds are issued by Azalea Asset Management, which is an indirect subsidiary of Temasek Holdings. Azalea specialises in private equity and is committed to innovating investment platforms to broaden access to PE.

2. High Credit Ratings

Astrea bonds have consistently met their obligations since launch and even enjoyed credit rating upgrades. Earlier series like Astrea III, IV, and V have all been fully redeemed, proving their reliability.

3. Track Record of Performance

Azalea has a strong track record of redeeming bonds at their first call dates. Here’s a quick summary:

• Astrea III (2016) – Redeemed at first call date

• Astrea IV (2018) – Redeemed at first call date

• Astrea V (2019) – Redeemed at first call date

• Astrea VI (2021) – Class A bonds fully reserved for future redemption

• Astrea 7 (2022) – Actively setting aside reserves in preparation for redemption

This track record shows that Azalea has both the capability and discipline to meet its commitments — a key reason why many investors trust the Astrea bond series.

How Safe Are Astrea 9 Bonds

Portfolio Exposure of Astrea 9

According to the preliminary prospectus, Astrea 9 bonds are backed by a US$1.625 billion portfolio of 40 private equity funds, managed by 31 general partners, and exposed to over 1,086 companies.

• Strategy: 83% are buyout strategies, 17% are growth equity

• Geographical exposure: 66% US, 26% Europe, 8% Asia

• Average fund age: 5.5 years — meaning they’re entering their cash-generating stage

Below is the fund strategy and age breakdown

Many of these funds are already in their cash-generating stage. This is important because mature PE funds are more likely to produce stable cash flows — good news for bondholders.

Below is the breakdown of the portfolio exposures.

Astrea 9 Portfolio Exposure, Source: Astrea 9 Presale Report

Structural Safeguards (Still in Place)

Similar to past Astrea issuances, Astrea 9 consists of multiple structural safeguards in place to protect bondholders’ interests and mitigate risks.

• Reserve Account: Cash set aside over time to ensure redemption at the 5-year call date

• Loan-to-Value (LTV) Limit: Keeps leverage under control

• Liquidity Facility from OCBC: Extra funding if cash flow timing is tight

• Skin in the Game: Azalea retains 52.7% equity, so they have a strong incentive to manage this well

When the investments in the Portfolio are sold, cash will be distributed through the structure to the Issuer, Astrea 9. The cash distributions are used to pay for expenses, bond interest and bond principal repayment through a Priority of Payments semi-annually. Here is a simplified illustration of the Priority of Payments for Bondholders.

What’s Different This Time

Every Astrea bond is similar but slightly different from the previous tranche. You can check my past articles for Astrea 8:

• An in-depth look at Astrea 8 PE Bond

• Astrea 8 balloting result and tips to get allocation

Here are the key differences between Astrea 9 bond and Astrea 8 bond:

• New Class B PIK Bonds Introduced: For accredited investors seeking higher risk/reward

• LTV Limit Raised: Now up to 50% (previously 40%)

• Shorter Non-Call Period for Class A-2: 5 years instead of 6

• Possibly Lower Yield: Given this year's interest rate environment, you should reasonably expect a lower final yield compared to last year's offer.

For the first time, Astrea is launching a PIK (Paid-In-Kind) bond. I want to explain a bit more about it.

PIK bonds are a special type of bond designed for investors who are comfortable with higher risk in exchange for potentially higher returns. Unlike traditional bonds that pay interest in cash, PIK bonds pay interest by issuing more bonds instead of cash payments during the interest period.

This means that the interest compounds, increasing the total amount owed but preserving cash flow for the issuer. Because of this structure, Class B PIK bonds are usually reserved for institutional or accredited investors who can tolerate greater volatility and longer investment horizons.

In the next section, you will also see that this Class B PIK bond has an expected BBB rating, compared to the expected rating of Class A-1 (A+ rating) and Class A-2 (A rating).

What Are The Astrea 9 Bond Offers

Astrea 9 comes with three classes of bonds:

1. Class A-1 (SGD) – Most suitable for retail investors in Singapore

2. Class A-2 (USD) – Also open to retail, but in USD

3. Class B (USD, PIK) – Only for institutional and accredited investors; pays interest in more bonds, not cash

Here’s a quick comparison of the indicative terms and yields (not final yet):

Source: iFast Financial

Note that the indicative yield is really just indicative. The final coupon will be determined through auction during the private placement tranche. I will explain more later.

How Should You Consider Astrea 9 Bonds?

I’ve covered the Astrea series of bonds for years — and for good reason. These bonds offer a rare opportunity to diversify into private equity while earning passive income. But before you jump in, ask yourself:

• Where does this bond fit into your overall retirement plan?

• Is the bond attractive in the current interest rate environment?

If you’ve followed me for a while, you’ll be familiar with my Kueh Lapis Retirement™ framework, which helps clients build stable retirement income in layers — just like a kueh lapis cake.

While stocks are "sexy" and often get the spotlight, fixed income instruments form the foundation of a reliable retirement portfolio. Many people avoid them, thinking they’re boring or low-yielding. But that’s changing.

Three years ago, I was one of the first in Singapore to advocate for T-bills when interest rates started to rise. My clients and FRM members benefited early.

Check out my earlier article in 2022, "4 Cash Alternatives to Invest in for Retirement When the Stock Market Is Volatile", where I also warned:

You need to be aware that such a parabolic rise in interest rates is a rare event, it is not normal. Knowing how to buy T-Bills doesn’t give you a free pass to earn a 4% return every year.

As of now, the latest 1-year T-bill (Jul 2024) now offers just 1.85%.

Astrea 9, on the other hand, sits nicely between the guaranteed and variable layers in the Kueh Lapis model. Why? Because while it’s not as “safe” as government bonds, it’s also not as volatile as stocks or REITs. It’s a middle layer — moderate risk, moderate return.

Ivan's Kueh Lapis Retirement Framework

How to Subscribe to Astrea 9 Bonds

Like all the past issues, there are two ways to subscribe - Private Placement and Public Offer.

Private Placement (Early Access for Accredited Investors)

• Happens before the public offer period

• Accredited investors, family offices, and institutions get first dibs

• May allow larger allocations or access to Class B bonds (refer to my analysis of Astrea 8 allocation result)

• Pricing is determined via a book-building process

• If you qualify as an Accredited Investor, contact me to enquire about how to place the private placement order.

Public Offer (Retail Investors)

• Open from 31 July (Wed), 9 am to 6 August (Tue), 12 pm

• Apply via DBS, OCBC, or UOB ATMs / internet banking / mobile apps

• Minimum S$2,000 (or US$2,000), in multiples of S$1,000

• A small admin fee may apply (e.g. S$2)

Final interest rates will be based on institutional book-building results. Retail investors will receive the same fixed coupon rate.

Consider Private Placement If You Are an Accredited Investor

If you’ve ever applied for Astrea bonds during the public offer, you’ll know they’re often oversubscribed. Many retail investors get only a small piece.

That’s why if you are an Accredited Investor, you should choose to go the private placement route:

• Larger allocation before the crowd

• Priority Access to A-1 and A-2 and Exclusive Access to Class B

• Tailored advice to fit your overall financial plan

You can also comment below if you have any general questions.

Related counters: $Astrea7B 6%320527#(V7BB.SI)$ $Astrea VI3%B310318#(6AZB.SI)$ $Astrea V3.85%B290620(5A1B.SI)$ $Astrea7A1 4.125%320527#(V7AB.SI)$ $Astrea8A1 4.35%390719#(Z1AB.SI)$ $Astrea8A2 6.35%390719#(Z2AB.SI)$