United Overseas Bank (UOB) says it intends to issue €1 billion ($1.59 billion) covered bonds as the eighth series under its US$8 billion ($10.74 billion) Global Covered Bond Programme.
The bonds, which are Euro-denominated, will carry a coupon of 0.01% per annum. They will be issued at 101.53% on Dec 1 and mature on Dec 1, 2027.
The pricing, says UOB, was revised from guidance of 22 basis points above mid-swap to 17 basis points with “minimal drops in the orderbook”.
The final pricing achieved was within fair value, adds the bank.
The final orderbook stood in excess of €2.1 billion from 85 investors.
The bank’s return to the Euro covered bond is the first such issuance by a Singapore bank since September 2018.
It is also said to be the first negative-yielding covered bond from Singapore with a reoffer spread of 17 basis points above the mid-swap, equating to a reoffer yield of -0.21%, and the tightest seven-year covered bond issuance spread in APAC since October 2018.
The bonds will be guaranteed by Glacier Eighty. The guarantee is secured by a portfolio of loans purchased by Glacier Eighty from UOB, as well as Glacier Eighty’s other assets.
UOB, HSBC France, Société Générale and UBS AG London Branch were lead managers for the deal while Norddeutsche Landesbank – Girozentrale was co-manager.
The covered bonds are expected to be rated Aaa by Moody’s Investors Service and AAA by Standard & Poor's Rating Services.
“UOB is committed to regular investor engagement and to maintaining a presence in the euro covered bond market,” says Lee Wai Fai, the bank’s group CFO.
“We were the first Singapore bank to bring euro-denominated Singapore covered bonds to investors in 2016 and now, we are proud to bring them back to the market. We thank our euro investors for their continued support and confidence in UOB’s strong balance sheet position and robust business fundamentals,” Lee adds.
As at 10.31am, shares in UOB are trading 22 cents higher or 0.9% up at $23.82.