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OCBC prices $550 mil worth of perpetual capital securities with 4.50% coupon

Felicia Tan
Felicia Tan • 2 min read
OCBC prices $550 mil worth of perpetual capital securities with 4.50% coupon
The capital securities are expected to be issued on Aug 15. Photo: OCBC
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Oversea-Chinese Banking Corporation (OCBC) O39 -

has priced $550 million worth of perpetual capital securities under its US$30 billion ($40.25 billion) global medium term note programme.

The capital securities will be first callable in 2029. They are also intended to qualify as the bank’s additional tier 1 (AT-1) capital under the Monetary Authority of Singapore’s (MAS) requirements.

The net proceeds from the issue of the capital securities will be used for the bank’s general corporate purposes. They may, subject to MAS’s approval, be redeemed at the option of the bank on Feb 15, 2029, or on any distribution payment date falling after the first reset date; upon the occurrence of a tax event; or if the capital securities no longer qualify as eligible capital.

Holders of the capital securities will receive distributions semi-annually in arrear at a fixed rate of 4.50% per annum (p.a.). If the capital securities are not redeemed on the first reset date, the distribution rate will be reset on the first reset date and every five years thereafter to a fixed rate per annum equal to the aggregate of the then-prevailing five-year Singapore Overnight Rate Average overnight indexed swap (SORA-OIS) and the initial spread of 1.3348%.

The terms of the capital securities may also be varied, subject to MAS’s approval, so that they remain as AT-1 capital of the bank.

As a Basel III capital instrument, if the bank is determined by the MAS to be non-viable, the capital securities will be written off in whole or in part. They may be subject to cancellation, modification, conversion, change in form, or have the effect as if a right of modification, conversion, or change of form had been exercised by the MAS under Division 4A of Part IVB of the Monetary Authority of Singapore Act 1970 of Singapore without prior notice.

See also: Warburg Pincus, Temasek buy insurance services firm SRG in £1 billion deal

OCBC is the sole lead manager and bookrunner for this issue.

The capital securities are expected to be rated Baa1 by Moody’s Investors Service, BBB- by Standard & Poor’s Rating Services and BBB+ by Fitch Ratings Ltd, and to be issued on Aug 15.

Shares in OCBC closed 8 cents higher or 0.62% up at $13.02 on Aug 7.

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