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UOB upsizes Australian dollar FRN issuance on strong demand, tight pricing

Goola Warden
Goola Warden • 2 min read
UOB upsizes Australian dollar FRN issuance on strong demand, tight pricing
SINGAPORE (July 18): United Overseas Bank has announced the issuance of A$500 million of three-year senior unsecured floating rate notes (FRN), priced at the Australian 3-month Bank Bill Swap Reference Rate + 0.53% per annum payable quarterly in arrears.
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SINGAPORE (July 18): United Overseas Bank has announced the issuance of A$500 million of three-year senior unsecured floating rate notes (FRN), priced at the Australian 3-month Bank Bill Swap Reference Rate + 0.53% per annum payable quarterly in arrears.

According to lead manager HSBC, demand was strong, with an orderbook of A$780 million that allowed the issuer to upsize the issuance from A$300 million to A$500 million.

Investors were largely institutional and Australian. Official institutions, fund managers, and insurers accounted for more the 70% of investors, with more than 87% of the issue sold into Australia.

“We have been closely monitoring markets and spotted a window of opportunity with last week’s announcement by the Australian Prudential Regulation Authority on Tier 2 securities. As part of UOB’s overall funding strategy, we are always looking to diversify our investor base and we are glad to see close to 90% participation by Australian investors, including many of the largest investors,” says Koh Chin Chin, head of Central Treasury Unit, UOB.

“The strong performance of the issuance reflects the confidence of international investors in UOB’s strong business fundamentals,” Koh adds.

HSBC says that UOB’s sophisticated financing strategy, nimble execution and strong following demonstrated its ability to be nimble across markets and capital structures, having tapped the Singapore dollar additional tier 1 perpetual market on July 11.

It also points to the confidence that international investors have in UOB’s balance sheet and business fundamentals, HSBC says.

UOB announces its 2Q19 results on Aug 1. The consensus net profit estimate on Bloomberg for the second quarter is $1.027 billion, marginally lower than 1Q19’s net profit of $1.052 billion.

The full year estimate for 2019 is a net profit of $4.17 billion.

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