This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
Bond Market News
UOB Sets Sterling Covered Bond Benchmark for Singaporean Banks
United Overseas Bank (UOB) priced the first sterling-denominated covered bond amongst its Singapore bank peers, with a well-received £350 million (US$486 million) five-year transaction at a floating coupon of 24 bps over the 3-month sterling Libor rate. Issued under UOB’s existing US$8 billion global covered bond programme, the bonds were marketed at an initial guidance of 26 bps area. Although comparables were trading at around 20-22 bps at the time, analysts speculate that UOB was willing to accept a slightly higher coupon for what is a decent issue size, especially with the deal being UOB’s debut in this market. From a relative-value perspective, sterling looks very attractive against euros and US dollars, with estimates that UOB would have expected to price a new euro covered bond, after adjusting for the swap, at around 5 bps worse. UOB would also be accessing accounts that would not participate in euro or dollar deals, thus filling a gap in the Singaporean covered bond market where a majority (60%) of outstanding bonds are euro-denominated, followed by US dollars (20%) and Australian dollars (18%). The bonds will be secured by a portfolio of loans and other assets, and are expected to be rated “Aaa” by Moody’s and “AAA” by S&P’s.
Meanwhile, Oversea-Chinese Banking Corporation (OCBC) provided further Singaporean supply in the covered bonds market, but defaulted to euros which the bank had issued in twice in 2017. Both of the OCBC €500 million 5-year bonds done last year were trading at around mid-swaps less 4 bps at the time. Investor interest was lukewarm as price guidance for the new 5-year was set at swaps plus 1 bp area and subsequently revised to minus 1 bp area. The €500 million issue is also expected to be rated “Aaa” by Moody’s and “AAA” by S&P’s.
Go back to Latest bond Market News
Related Posts:
BondbloX Pte. Ltd. is regulated by the Monetary Authority of Singapore as a Recognised Market Operator ("RMO") and exempted from Section 49(1) of the Securities and Futures Act (Cap. 289) ("SFA") under Section 49(7) of the SFA.